Can We Keep My Son’s Leftover 529 Money for His Kids?

Summary

Ramsey Everyday Millionaires — Episode Summary

Episode Title: Can We Keep My Son’s Leftover 529 Money for His Kids?
Air Date: March 16, 2026
Hosts: Dave Ramsey, Chris Hogan
Caller: Alan from Colorado

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Episode Overview

This episode centers on a rare but enviable dilemma: what should a family do with significant leftover funds in a 529 college savings account after their child is finished with school? The hosts unpack creative options for multi-generational wealth, examine the mechanics and flexibility of 529 accounts, and celebrate the long-term discipline and planning that got the caller here. The conversation is filled with actionable insights, practical math, and a lot of good-natured banter about building real, lasting family wealth.

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Key Discussion Points & Insights

1. Setting the Stage: The Caller’s Situation

• [00:16] Alan, the caller, explains he and his wife have about $120,000 left in their son's 529 account, with their son nearing college graduation.
• No other children, making the management and legacy of the funds especially relevant.

"When he is finished with college, which is just a couple years down the road, there'll be approximately 120,000 left in the 529 account." — Alan (00:16)

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2. Options for Leftover 529 Money

Roth IRA Rollovers (Secure 2.0 Act)

• [00:44] Chris Hogan brings up a new provision:
  • If the 529 has been open for at least 15 years, up to $35,000 can be rolled into a Roth IRA for the beneficiary.
  • This must be done periodically, not in one lump sum, subject to annual Roth contribution limits.

"You can roll over up to 35 grand if it's been open for 15 years...up to the Roth IRA limit, you can start funding that. So that's one option." — Chris Hogan (00:50)

Multi-Generational Family Endowment

• [01:22] Alan proposes maintaining the 529 as a nest egg for future generations.
• [01:49] Chris and Dave celebrate this vision, likening it to an endowment ensuring no descendant needs to go into debt for education.

"It becomes like an endowment basically for your own family. Generational wealth that no one ever goes into debt for education." — Chris Hogan (01:49)

Changing the Beneficiary

• 529 beneficiary rules are flexible:
  • [03:00] Possible to reassign the account to future grandchildren, nieces/nephews, or siblings at any time.
  • Broad definition enables blessing a wide range of family members.

"A lot of people don't realize the definition of beneficiary family is pretty loose...future kids, yourself, your spouse, a grandchild." — Chris Hogan (03:05)

Withdrawals for Non-Education

• [02:47] Alan asks about eventually using funds for retirement.
• [03:00] Chris clarifies: Withdrawals for non-education trigger a 10% penalty, but the money isn’t lost.
• [05:34] Dave reiterates: In a “cash emergency,” you can withdraw with a penalty, but it’s still your money.

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3. The Power of Compounding & Long-Term Discipline

• [02:39] Chris runs the numbers: If $90k is left untouched from age 20 to 48 (as the next generation comes of age), it could grow to over $1.4 million, illustrating the magic of compounding.
• [04:01] Alan shares that by following Ramsey principles and stopping contributions when his son entered college, withdrawals for school barely dented the account, which continued to grow.

"It was growing faster than you were withdrawing?" — Chris Hogan (04:40)
"That's what I'm telling you." — Alan (04:43)
"That's incredible." — Chris Hogan (04:44)

• Role Modeling: Alan taught these money concepts and discipline not only in his own house, but also through many Financial Peace University (FPU) classes.

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4. Strategies & Cautionary Tales

Not Overfunding? Think Again.

• Chris counsels against fearing overfunding — surplus becomes a family asset, not a liability.

"If I overfund it, they're going to love all great, great Grandpa George for setting up this 529 many moons ago." — Chris Hogan (01:49)

Avoiding Direct Child Ownership (UGMA/UTMA)

• [05:58] Chris warns about giving minors control:
  • At age 18, most lack the maturity for large sums.
  • Favors keeping custody with the parent or guardian.

"I'm not a fan of putting the accounts in your kids names because they legally then have access...most of them cannot be trusted with $120,000." — Chris Hogan (06:23)

• Instead, the parent stays in control and doles out funds thoughtfully, teaching delayed gratification.

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5. Changing Nature of College & Flexibility

• [05:27] Hosts acknowledge the college landscape is evolving (costs, needs, even the question of whether traditional college is necessary), increasing the virtue of flexible planning.
• [05:58] If needs change, 529s have options — no “lost” money even with penalties.

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Notable Quotes & Memorable Moments

• "That's usually not—it's usually the opposite problem that we talk to people about." — Dave Ramsey (03:45), highlighting how rare overfunding is
• "If you're in the family tree of Alan, you should be thankful right now." — Chris Hogan (05:08)
• "Delayed gratification. For a 45 year old, 50 year old, it's probably a little bit more embedded than a 18 year old." — Dave Ramsey (06:44)

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Important Timestamps

• [00:16] — Alan explains the 529 situation
• [00:50] — Secure 2.0 Roth rollover option described
• [01:22] — Generational endowment idea introduced
• [02:39] — Projected account growth math
• [03:00] — Flexibility on withdrawals and beneficiaries
• [04:01] — Compounding growth in Alan’s account
• [05:27] — College landscape is changing
• [05:58] — 529 vs. regular investing accounts for kids

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Tone & Style

The hosts maintain an encouraging, practical, slightly humorous tone throughout, aiming to both empower and entertain. They champion discipline, celebrate Alan’s rare accomplishment, and encourage listeners to think generations ahead.

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Takeaway

This “opposite problem” case study is a masterclass in long-term planning and generational thinking. The discussion challenges listeners to dream big about legacy, gives actionable strategies for large or leftover college funds, and drives home the importance of early, consistent investing. It’s a hopeful glimpse at what’s possible with discipline—and a vivid reminder that good planning blesses families for decades (or centuries!) to come.

Transcript

[Dave Ramsey]

Foreign.

[Chris Hogan]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Allen is in Colorado. Up next. What's going on?

[Caller Alan]

Alan, thank you for taking my call. I have a question about a 529 account that my wife and I have for our son. When he is finished with college, which is just a couple years down the road, there'll be approximately 120,000 left in the 529 account.

[Chris Hogan]

Oh, wow. Way to go.

[Caller Alan]

I haven't. Yeah, yeah, it's pretty strong. I have an opinion of what to do with it, but I was just curious to get your stake.

[Chris Hogan]

How old is the 529? When did you open it?

[Caller Alan]

Oh, boy. Our son is 20. So let's say 20 years ago.

[Chris Hogan]

Oh, great. I was going to say there's the. With the new Secure 2.0 act, you can roll over up to 35 grand if it's been open for 15 years. You know, you can use that periodically. You can't do all 35 at once, but up to the Roth IRA limit, you can start funding that. So that's one option.

[Dave Ramsey]

Yeah. Do you have other kids, Alan?

[Caller Alan]

No, we don't.

[Dave Ramsey]

Just don't.

[Chris Hogan]

Okay.

[Dave Ramsey]

It's just this. Yeah, well, if you do that, you know, that's 35 out. So you got about, what, 85 or so 95 left.

[Chris Hogan]

You said you had a plan already. I'm curious as to what you wanted to do.

[Caller Alan]

So my thought is keep it. Keep the 529. We're the Guardian of it. Put it in his name. He's an adult now, but don't let him touch it. Just have it be there. So it's generational. When his kids are ready to go to college, that's going to be a pretty large sum. When his kids. Kids get ready to go to college, it'll be astronomical. It's something that you could really just leave.

[Chris Hogan]

That's true. A lot of people don't think about that. It becomes like an endowment basically for your own family. Generational wealth that no one ever goes into debt for education. And that's personally what I'm doing. A lot of people go, well, I don't want to overfund it, because what if they don't go to college and I go. If I overfund it, they're going to love all great, great Grandpa George for setting up this 529 many moons ago. And can I do some math for you? Your kid is 20, right?

[Caller Alan]

He's 20.

[Chris Hogan]

So let's say he has a kid at, what, 25? Is that fair?

[Caller Alan]

It's optimistic, but sure.

[Chris Hogan]

Okay. Should we go 30? Is that more realistic? Yeah, go 30 plus 18 years. That kid then grows up.

[Dave Ramsey]

Yeah. So your son will be 48 when your grandson, granddaughter goes to college. Theoretically, how much would be in the

[Chris Hogan]

account from 20 to 48 if you just left, let's say 90 grand in there. Right.

[Dave Ramsey]

Didn't do anything.

[Chris Hogan]

You never contributed another dime. You'd have $1.4 million when he's 48. I hope that's enough to cover college at that point.

[Caller Alan]

And something, too, I was thinking, is, even if his kids don't want to go or do go, and there's extra at 65, correct me if I'm wrong, he can start using that for his own retirement with no penalties.

[Chris Hogan]

Yeah. There's a lot of stipulations with the 529. That, and even if he used it in before then, you know, he'd pay the 10% penalty. But other than that, it's not like wasted money. Yeah, you'll pay something thrown down the toilet. So I think you're being very wise with this. And I love the idea of creating generational wealth. And a lot of people don't realize the definition of beneficiary family is pretty loose. And so siblings, nieces, nephews, future kids, yourself, your spouse, a grandchild. There's so many options here that you could bless someone with in your family.

[Caller Alan]

Agreed. That's right.

[Chris Hogan]

And so let's say you got a brother, and they're like, hey, they didn't prepare, but the kid doesn't deserve to go into crippling debt just because of that. I'd love to transfer this to them. You can change beneficiaries at any time at that point.

[Dave Ramsey]

Yeah.

[Caller Alan]

Yeah. There's a lot of ways you can go with it.

[Dave Ramsey]

Yes, for sure. Well done, Alan. That's usually not. It's usually the opposite problem that we talk to people about.

[Chris Hogan]

So it's like a parent plus loan. This is the exact opposite. So I'm curious, how much money did it cost for your kid to go through school?

[Caller Alan]

So first off, something else, too. We owe it to Dave Ramsey from, like, 2005. You all have been a blessing to both my wife and I. So much. So we. We actually taught many, many FPU classes.

[Chris Hogan]

Thank you.

[Caller Alan]

So. Yeah, you're welcome. You're welcome. So this 529 account, we actually showed him how compounding interest works. We stopped investing in the 529 when he was a freshman in college at 150. That's about where it was at. He's gone through three years of school and it's at 159.

[Chris Hogan]

Wow.

[Dave Ramsey]

It's crazy.

[Chris Hogan]

So you're telling me that it was growing faster than you were withdrawing?

[Caller Alan]

That's what I'm telling you.

[Chris Hogan]

That's incredible.

[Dave Ramsey]

That's amazing.

[Chris Hogan]

And it sounds like he went to a reasonably priced school and maybe even got some other scholarships, A few scholarships.

[Caller Alan]

He wasn't, you know, he wasn't Albert Einstein, but he did okay. And, and yeah, it was, it was a state school, so. 20, 22, 23,000.

[Dave Ramsey]

Totally.

[Chris Hogan]

That's incredible.

[Dave Ramsey]

Yeah, that's the dream, Alan. Well done, well done. We just, just applaud you. I mean honestly, that is, if you're

[Chris Hogan]

in the family tree of Allen, you should be thankful right now.

[Dave Ramsey]

That's right.

[Chris Hogan]

Pretty awesome. Thank you for the call. That's, that's a cool kind of case study. And what actually happens when you do it right. Yes. And so I always recommend get started early on that 529. Even if it's 100 bucks. 200 bucks, 300, 400, 500. Now you're talking six figures in there by the time they're 18 for sure.

[Dave Ramsey]

And the college conversation I feel like is been around a little bit. Changing, right? That college is changing. We don't know what it's going to look like.

[Chris Hogan]

Are we all going to be YouTubers and AI is going to do all

[Dave Ramsey]

the work for us? Yeah, that's right. Like we don't know. But just remember, it's not stuck in there to your point. It's not like you're, you know, it's an insane amount. If you were to pull it. I just say like God forbid, you're like, listen, we don't, we don't need this at all. But we need the cash, so we're going to take the penalty. Okay, so then you do that, right? And you pay some of the penalty, but then you have your cash. It's not like you lose it completely.

[Chris Hogan]

And people ask, well, what if I want to invest for my kid for something else other than school? I say, great, do the 529. Don't trade those dollars for investing over here. If you want to invest on top of that, you can just open a brokerage account in your name, a non retirement account and put money in there. I'm not a fan of putting the accounts in your kids names because they legally then have access with the, you know, the UGMA or UTMA. At 18, this kid might have 120 grand that's legally theirs. That's frightening. I don't know if you know, or any 18 year olds. Most of them cannot be trusted with $120,000 pile of money. Most adults can't be trusted with that, say.

[Dave Ramsey]

Yeah.

[Chris Hogan]

And so I like the idea of me being able to control how much to give to that child for a, you know, a wedding or a down payment or a car, whatever it is to help them get a leg up.

[Dave Ramsey]

Yeah. Delayed gratification. For a 45 year old, 50 year old, it's probably a little bit more embedded than a 18 year old.

[Chris Hogan]

So their prefrontal cortex is not yet fully there. So that's, that's personally what I'm doing for my kids. I got the 529s for each of them and I've got the brokerage accounts so they'll be very thankful one day. When homes are $4 million.

[Dave Ramsey]

And your grandkids.

[Chris Hogan]

And my grandkids.

[Dave Ramsey]

Great, great, great Uncle George.

[Chris Hogan]

That's so weird to think about. But I think, Grandpa George, I'm going to settle into that.

[Dave Ramsey]

I love it.

[Chris Hogan]

I'm going to be cranky.

[Dave Ramsey]

You're going to be like George Banks on, like Steve Martin on Follow the Bride.

[Chris Hogan]

Oh, that's a good one. I thought you were going George Bailey. A lot of good Georges out there in movies.

[Dave Ramsey]

Oh, It's a Wonderful Life. That's a good one too.