Despite the burgeoning cost of higher education these days, some parents might still end up with unspent money in a 529 plan after their child has graduated from college. As you may know, if you withdraw the money for purposes other than for your child’s education, you have to pay taxes plus an additional 10% penalty on the earnings in the account. If you find yourself in such a situation, are there ways in which you can utilize the money while avoiding the taxes or penalties? Quite a few, as it turns out. Here are some options for you to consider.

Use it for graduate school. If your child is interested in furthering his/her education, the money can be used tax-free just as it was for college. Any higher-education institution that receives financial aid qualifies.

Use it for another child. You are allowed to change the beneficiary of the 529 plan to another qualifying family member without any tax consequences. If you have other children soon to enter or currently in college, the money can be used to pay for their qualified expenses even if you have other 529 plans set up for them. Furthermore, since 2018, money in 529 plans can be used for elementary and secondary education as well. It’s a great option if you have younger children in private schools.

Use it for another relative. The IRS allows you to change the beneficiary not only to siblings but also to parents, aunts, uncles, nieces, nephews, stepparents, and even first cousins. There is no time limit for using the funds so you can even save it as a potential gift for a future grandchild. One caveat: try to avoid skipping a generation (e.g. changing the beneficiary to the current beneficiary’s grandparents or grandchildren). Such a move could trigger a tax penalty.

Use it for your own or your spouse’s career by making yourself the beneficiary. Either parent qualifies as a successor beneficiary, and the list of qualified schools includes community colleges, art and music schools, and vocational and trade schools. Even certificate programs and continuing-education courses may qualify. Whether you are interested in changing your career or simply want to enjoy earning a new degree in retirement, using leftover 529 funds enables you to avoid dipping into your other savings.

Use it as an estate-planning vehicle. Since there is no time limit on spending the money in a 529 plan, you can choose to bequeath it to an heir, such as to your children for the benefit of their children.  You retain control of the account until you die, and can continue to make tax-free contributions up to the annual gift-tax exclusion amount (currently $15,000). Plus, after you pass away, the value is not counted as part of your estate for estate transfer tax purposes.

There are also several ways to avoid the 10% penalty (although still incurring taxes on the earnings):

Use it to offset any scholarships your child received while in college. You can withdraw any amount from the 529 plan up to the value of all scholarships received and have the 10% penalty waived even if you apply years after the scholarship was earned. Distributions will be taxed based on the percentage of earnings in the account, since it’s only the earnings (not the original contributions) that are taxable. You cannot choose to distribute the contributions first.

Use it for a disabled beneficiary or for one who enlists in the military. As with the above, you’ll still need to pay taxes on the distributions but will avoid the 10% penalty.

Take out the money and give it to your child or spend it yourself. In other words, bite the bullet and pay the taxes and the 10% penalty. The withdrawal amount will be taxed at the beneficiary’s rate. If that’s currently your child, his tax rate is likely to be lower than yours. And as mentioned before, none of the contributions are taxable, so the amount you actually have to give up to the IRS may be less than you think. In the rare case that the value of the 529 account is currently less than the total amount you originally contributed due to poor investment performance, you won’t owe any tax or the 10% penalty, and might even be able to claim the loss on your tax return.

See IRS Publication 970 for more details.