So you can potentially reallocate the money to the next generation down (there are some gift/estate tax issues to consider, but the extended tax free returns can be helpful). You can also reallocate it back up to yourselves. There are various possibilities for qualified withdrawals, and even paying the penalty for unqualified withdrawals is not always a bad deal.
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As @NiceUnparticularMan says, multigenerational or “dynasty” 529 plans are a thing - Dynasty 529 Plan For Multigenerational College Expenses does as good a job explaining them as anything else I’ve read recently. This may be pretty far afield for you but it’s at least an interesting read.
Very interesting article.
My two cents is that while we have yet to intentionally create what they called a Dynasty 529, if we “accidentally” did that thanks to our kids having lower qualified expenses than we ended up funding, this would be far from a bad outcome.
So hypothetical overfunding has never been a big concern of ours.
On the other hand, rarely have heirs minded inheriting financial assets in a normal brokerage account with a stepped up basis. So that is good too.
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Or to end up with higher returns than anticipated, leaving a balance for future generations.
Indeed. Your early contributions ballooning into a “Dynasty 529” thanks to a good couple decades of average returns is very much a “First World problem”.
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