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Prepaid college plans can transfer

Paying for college is such a tough task, it's a downright shame to let even a dime of savings go to waste.

I thought about that as I looked at the Florida Prepaid College Plan Web site (www.florida529plans.com) last week and saw a long list of names of people whose benefits are about to expire. Out of high school for a decade, they've used only part of their tuition and dormitory plans or none at all.

Unless they act by Dec. 15, they forfeit their unused benefits. Their options: get a 10-year time extension to continue their educations, get their original investments back without interest or transfer their plans to family members.

I recommend that last option as a great way to keep college savings in the family. In fact, don't wait until benefits are about to expire if you know they aren't going to be used.

All types of 529 college savings plans can be transferred to family members without any income tax consequences. The definition of "family member" covers parents, children and siblings, including the half- and step- versions of the above. It also includes spouses, aunts, uncles, grandparents, first cousins and in-laws.

The Florida Prepaid College Plan, which guarantees tuition payments, also has Florida residency and age restrictions for transfers. The new beneficiary generally must be in 11th grade or younger.

"If the student is definitely not going to be able to use their benefits and a younger sibling is available, that's what this really works well for," said Pieter Swart, finance manager for the prepaid board.

Another likely scenario: A grandparent who bought a plan might want to transfer it to another grandchild. It might even go to the child of the original beneficiary, providing a real head start on college savings.

Any transfers involving an exception to the age rule require board approval, but you might want to petition the board if you've got a good case.

Investment-focused college savings plans, including the Florida College Investment Plan, don't have age and residency rules. The transfer rules are so liberal that you can set up a plan for an unborn child or grandchild by naming yourself or another family member as the initial beneficiary and changing the designation later.

The right to change beneficiaries on college plans belongs to the account owner. If that's you, be sure your account forms designate someone else to take over account management at your death.

Open enrollment for Florida's prepaid plan continues through Jan. 31. The investment plan is open year-round. More information is available on the prepaid Web site or by calling toll-free 1-800-552-4723.

Do I have to take distributions from my IRA and 401(k) if I'm 70-1/2 but still working?

Yes on the IRA; maybe on the 401(k). You can delay distributions from your 401(k) or other employer-sponsored plan if you are still working and you are not more than a 5 percent owner of the company. The plan rules also must allow delayed distributions. If all these conditions are met, you do not have to take your first minimum distribution until April 1 of the year after the year you retire.

My wife and I have a will and a living will prepared by a Florida attorney. We are moving to Ohio. Do we need new documents prepared in Ohio?

You should have your estate planning documents reviewed by a lawyer in Ohio. Each state has its own rules for probate, and using the right language can prevent potential problems for your beneficiaries. For example, states have rules about witnesses and who can serve as your personal representative or executor.

Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, write hhuntley@sptimes.com or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731. Read more questions and answers at blogs.tampabay.com/money.

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