Well, thanks to the Military Family Tax Relief Act, the funds return to us without penalty except for taxes on the gains: “The value of the no-cost education (as determined under the U.S. military code) can be withdrawn penalty-free from a 529 or CESA, although the earnings portion will continue to be taxable.”
We plan to leave the 529 intact until he graduates in case he decides to withdraw and attend a civilian school. If he doesn’t use them, most of the funds will go into our retirement investments, minus a portion that we are giving him to add to his own investments.