Although you can find everything you need to know about the current crop of college savings plans here, there may be something on the horizon that might just go one step further.

President Bush has proposed something that would remove the fear of penalties from 529 plans. Those penalties kick in when your child decides that college is not for them. Money in these savings plans would then be taxed and penalized if withdrawn for any other reason. The Lifetime Savings Account, an after tax accumulation of savings, can be withdrawn at any time for any reason without penalty. The reason is the tax has already been paid.

529 plans provide this tax free status only if the child goes to college. Some folks may want to continue to use 529 plans even if the administration gets this plan enacted. Check with your state to find out if state tax breaks make rolling over into this as yet approved plan less attractive.

One word of caution, the roll over that will be permitted for a limited time will come with some penalties but as I understand it, those costs will be spread over several years. In essence, you are paying tax on savings you have sheltered from tax previously.

Nothing it seems comes without some sort of caveat.

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