Money from a 529 account can be used for major post-secondary education costs such as: Required tuition, fees, books, supplies and equipment. Certain room and board expenses, which may include food purchased directly through the college or university (for the stipulations of off-campus living — see below)
What expenses can you use 529 for?
- Qualified expenses that 529s cover.
- College tuition and fees.
- Vocational and trade school tuition and fees.
- Elementary or secondary school tuition.
- Elementary or secondary school tuition.
- Student loans.
- Off-campus housing.
- Books and supplies.
Can you use 529 money for other things?
Assets in a 529 can be used at any eligible institution of higher education. That includes not only four-year colleges and universities but also qualifying two-year associate degree programs, trade schools, and vocational schools—both at home and abroad.
Can I buy a computer with 529 funds?
Previously, you could use money from a 529 plan to buy a computer only if it was required by the college for attendance. That is no longer the case. Savings can indeed be used to buy a computer or pay for internet access as a qualified higher-education expense.
Do I need receipts for 529 expenses?
You don’t need to provide the 529 plan with evidence that you will be using the money for eligible expenses, but you do need to keep the receipts, canceled checks and other paperwork in your tax records (see When to Toss Tax Records for more information), in case the IRS later asks for evidence that the money was used
Are groceries a qualified 529 expense?
Food expenses and meal plans (which fall within the “board” section of room and board) are a frequent use for 529 savings because of the ease of documentation. The funds can be used to buy groceries and other meals, so long as proper documentation of the receipts is maintained.
Can I use my child’s 529 to pay off my student loans?
A new law allows borrowers to use 529 college savings plans to pay off student loan debt.
What happens to money in 529 if not used?
A 529 college savings plan allows families to save money for their child’s college education in a tax-free investment account. If the money is used for anything outside of the qualified education expenses, the family must pay a tax penalty of 10% on the plan’s earnings.
How long must money stay in a 529 plan?
indefinitely
529 plans do not have withdrawal deadlines. A 529 plan account owner is not required to take a distribution when the beneficiary reaches a certain age or within a specified number of years after high school graduation, and funds can remain in the 529 plan account indefinitely.
Is a laptop a 529 expense?
Technology Items – You can use a 529 plan to cover technological needs such as computers, printers, laptops and even internet service. These items must be used by the plan beneficiary while enrolled in college.
What are qualified higher education expenses?
A qualified higher education expense is any money paid by an individual for expenses required to attend a college, university, or other post-secondary institution. QHEEs include tuition, books, fees, and supplies such as laptops and computers, but expenses like insurance and health fees are not eligible.
What is a qualified withdrawal from 529 plan?
When you pay qualified education expenses from a 529 account, your withdrawals are tax- and penalty-free. As of 2019, qualified expenses include tuition expenses for elementary, middle, and high schools (private, public, or religious).
How can I avoid paying taxes on 529 withdrawals?
5 tips for a tax-free 529 plan withdrawal
- Calculate your qualified expenses.
- Decide which account to use.
- Match your 529 plan withdrawal to qualified education expenses.
- Make the distribution payable to the beneficiary.
- Evaluate any leftover funds.
How much can you withdraw from a 529 per year?
To be safe, limit your 529-plan withdrawals to your beneficiary’s total qualified higher education expenses less $4,000. If you are not eligible for the American Opportunity Tax Credit but plan on claiming the Lifetime Learning Credit, the adjustment can be for as much as $10,000.
Can I use a 529 for a down payment on a house?
Even if the student were to buy the home, they still can’t use 529 plan money to make the mortgage payments. A mortgage payment is a payment on a loan and not a payment of housing costs. As such, it is not a qualified higher education expense.
Does 529 cover room and board?
You can use a 529 plan distribution to pay for a student’s room and board expenses if the student is enrolled at least half-time. The room and board expenses must be incurred while the student is enrolled at a college or university that is eligible for Title IV federal student aid.
How do I use my 529 to pay for tuition?
You can call your plan administrator, make a request online, or submit a withdrawal request form. The plan can send withdrawals by check to the account owner, the beneficiary, or the school. You can transfer the money to yourself or the beneficiary electronically and then make payment to the school.
Is fafsa a 529 plan?
But many parents are reluctant to open a 529 account because they think it’ll affect their child’s eligibility for financial aid. 529 plans do affect financial aid, but not to the degree you might think. Assets in a 529 are counted as the parents’ assets on the Free Application for Federal Student Aid (FAFSA).
Can you take a loan from a 529 plan?
No. Section 529 plans do not allow loans against an account’s assets. You can, however, make withdrawals from the plan to pay for qualified educational expenses.
Can I transfer my child’s 529 to my grandchild?
In addition to college expenses, up to $10,000 per year per beneficiary from all 529 accounts can be used to pay for the beneficiary’s tuition in connection with enrollment or attendance at an elementary or secondary, private, public or religious school. So, you might want to name a grandchild as the new beneficiary.
Can 529 be rolled into an IRA?
The Internal Revenue Code does not permit a taxpayer to roll over a 529 college savings plan into a Roth IRA. Instead, one must take a nonqualified distribution from the 529 plan and invest the cash in a Roth IRA, subject to the applicable annual limits.
