If it's the last week of the month, odds are that Alison Southwick and Robert Brokamp are going to amble over to the Motley Fool Answers mailbag to find out what it is their listeners really want to know. And for added gravitas and expertise, they've brought in reinforcements: Naima Barnes, a financial planner with Motley Fool Wealth Management, a sister company of The Motley Fool.

In this segment of the podcast, they tackle two questions about 529 plans. Each state has its own variation on these college savings plans. If you move to a new one, should you transfer the accounts to your new home base? And just how long do funds have to be invested in one of these plans for a person to get the tax benefits?

A full transcript follows the video.

This video was recorded on May 29, 2018.

Alison Southwick: Our next question comes from Rob from Crozet, Virginia. "I have two questions about 529 accounts. Say, theoretically, a family lives in the great Commonwealth of Virginia, where we can deduct from state income up to $4,000 per account. This theoretical family is considering moving out-of-state -- commonwealth --" [people get real nitpicky about that], "and was wondering what they should do if anything with those accounts.

To complicate it slightly, let's say they have Virginia accounts for their adult daughter who lives far away, really for her future children; their high school senior son, who will withdraw some money next year; and their grade school niece and nephew who currently live in Virginia."

Robert Brokamp: These people are very generous in terms of looking after the college well-being of many relatives.

Southwick: Yes, that's awesome!

Naima Barnes: So, when you move out-of-state, theoretically...

Southwick: Theoretically...

Barnes: ... you can keep your 529 at your current state plan, so you can keep it in your Virginia plan if you enjoy the investment options that you have with that plan. There's two benefits to moving it out of the Virginia plan. If you move to a state that also has a deduction; yes, that's one of the biggest benefits. You can move it to that plan and that plan will provide you with the tax deductions that you're looking for.

And then the other benefit would be to move it to a plan that has better investment options. On some of the list of the best 529 plans, Utah is a really good one. New York. Maryland. Those are all really great plans. If you move to a state and they might not offer the tax deduction, or the investment options are terrible, then you can move it to any other state that has a great investment option or is one of the more reputable 529s.

Brokamp: Right. And Morningstar rates plans. SavingForCollege.com rates plans. You can go there to see what the ratings are on your various options. But you can have multiple 529s in multiple states, so that's perfectly fine. You don't have to use your state's plan.

A couple of things I would highlight, here. I found this out from Tim McFillin, who is with TheCollegeFundingCoach.org and was on the show last month. For Virginia, for example, the limit for the deduction is $4,000. If you contribute more than that you have two options. The money you contributed over that amount you can deduct in a future year or just open a separate account, because it is per account. So, if you're going to contribute $8,000 just contribute to two separate accounts. Even for the same kid you can take the deduction in the same year.

And the other thing I'd point out about the 529 for the nieces is when it comes to accounts that are owned by relatives other than parents, the distributions from those plans can affect financial aid, so generally you want to save those for the last year of college.

Southwick: With Virginia, if you are going instate or if you are using a 529 within Virginia, doesn't it go farther if your kids choose a Virginia school?

Barnes: No.

Brokamp: Well, that's a good point. There are really two 529 plans. There's the savings plan, which is basically like a 401(k). You choose from among the mutual funds. In that case, no. If you are choosing the prepaid tuition plan, you can only get that guarantee if you choose a Virginia state school. You can go out-of-state, and you get most of that money back, but it's not guaranteed to cover tuition at that school.

Southwick: You've really got to look closely at the fine print of these plans.

Brokamp: Right. I will point out, by the way, that this show is airing on May 29th -- 529.

Barnes: Ooh!

Brokamp: Hey.

Barnes: And you can use your 529, now, for K-12.

Brokamp: That's right. After $10,000 you can use it for private elementary and secondary school costs.

Southwick: And Ron has a follow-up question. "Is there a time limit for the funds to be invested? If we find that we need non-529 money to pay tuition, could we fund a money market type of 529 account up to the maximum deduction, then take the money out a couple of months later to pay tuition? When I fill out my state taxes, it doesn't say anything other than how much we contributed. I guess really one could put in well more than the limit and carry over the extra to deduct on future tax returns. Getting back 5.75% of that money in Virginia seems like cheating. Yours, theoretically, Rob."

Barnes: You can. Definitely if the investment options offer a money market vehicle for investing you can put it in there. There isn't a time limit that you have to keep the money in a 529, so you can do that theoretically, and you still get the deduction because it will show as you put in money for the 529 for that year. But the contributions for a 529 are immediately invested, so you do want to make sure that those contributions are going toward a money market or bond-type fund when you invest them.

Brokamp: Right, because you're really spending the money within the next year or so, so you're playing pretty safe with it. There is something called "tax recapture" with 529s, by the way. If you put money in and get the state deduction, and then you end up using the money for something other than qualified higher education expenses, you might have to pay back some of that money that you got through the deduction. That varies by state, but just understand that if you end up using the money for something other than college, you may have to give some money back.

Alison Southwick has no position in any of the stocks mentioned. Robert Brokamp, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.