A recent T. Rowe Price survey found nearly half of parents who've socked money away in 529 plans for their child's college education have raided those accounts.

Four out of five parents who admitted to dipping into 529s also admitted to spending the money on something other than education.

When asked why, they claimed they thought it was either "use it or lose it" or didn't know any better.

"In the survey, about 21 percent of people said that they don't think there's any penalties to tapping the funds early, which, sorry guys, but there are penalties there and you're also going to owe some taxes on any earnings that are in the account," explained CNBC's Kelli Grant.

Those penalties and taxes could be levied at both the state and federal level.

The best way to avoid IRS scrutiny is to leave the 529 money alone, even if unused, for college expenses down the road.

"There are some planners who say you can really hang onto it long range to think about eventually transferring that money to your child's child, your grandchild, to help put them through school," Grant says.

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