What if your beneficiary gets a scholarship? What if your child decides not to go to college?

VEST offers a number of options:

• VEST account benefits may be rolled over to a member of the family of the beneficiary
• The VEST account owner may want to maintain the VEST account because a student has at least ten years after the projected high school graduation date to use the account benefits (or ten years after the account is opened if the beneficiary has already graduated from high school)
  
• The account owner may cancel all or a portion of the account

An account owner may cancel a VEST account at any time for any reason and receive a refund of the current account balance. Non-qualified distributions, other than those in the event of the beneficiary' death, disability or receipt of a scholarship, are subject to a federal tax penalty of 10% of the earnings. Federal tax will also be due on the earnings portion of any distribution not used for qualified higher education expenses.

In the event refunded funds are not used for higher education expenses, or if the account is rolled over to another state's section 529 plan, the account owner must add the deducted amount back to his or her Virginia income for state income tax purposes unless the refund is due to the beneficiary's death, disability or receipt of a scholarship.