Guimond-Quigley has seen parents return to court because one parent has withdrawn 529 funds for non-college expenses. Typically, the court will order that parent to reimburse the amount they withdrew from the account and to pay the taxes and fees triggered by that withdrawal, she said.
“In some cases, it might be appropriate to actually freeze the account and prohibit any withdrawals until further court order,” she said, but to allow for deposits.
A stepparent has no rights or accessibility to a stepchild’s 529 account unless the child’s parent gives the stepparent power of attorney, said Guimond-Quigley. “Although you can’t prevent any or all fraudulent behavior,” she said, “I don’t see this as a high risk.”