"It's still your money," she said. "You can take it back."
Two of her clients recently started looking into doing just that, after their older son decided to attend an in-state school instead of what had been his first choice private college. That dropped the family's expected annual cost from $60,000 to just $10,000.
"He's going to have a lot of money left over," Durkin said, and his parents told him he could have the difference.
Withdrawals that won't be used for qualified education expenses do come with a few strings. Generally, you'll owe federal taxes and a 10 percent penalty on the earnings and you may owe state taxes if you had claimed a deduction or credit for those contributions, Levy said.
If your child receives a scholarship, you can withdraw funds equal to that without paying a penalty, he said. But you'll still owe taxes on the earnings.