529 Plan Qualified Education Expenses

529 plans are special investments with tax advantages that allow people to put aside money for college. The contributions grow tax free while in the account and can be taken out of the account tax free as long as the money is used for qualified educational expenses. If the money is not used for a qualified educational expense, it is subject to a 10% penalty in addition to state and federal taxes.
  1. Tuition

    • As long as you are attending a qualified higher educational institution, you may withdraw funds for tuition. To check if a school is a qualified educational institution, see the resources section.

    Fees and Equipment

    • 529 distributions can be used for any fees, books, supplies or equipment that is mandated by the college or university. Equipment can include a laptop or other computer if it is required by the school.

    Room and Board

    • If you are enrolled at least half time you can use 529 distributions to cover room and board. However, this amount cannot exceed the room and board estimated cost issued by the school.

    Special Needs Services

    • If the beneficiary of a 529 plan has special needs, distributions can be used to pay for any accommodations that are required to make it possible for the student to attend school.

    Exceptions

    • If the beneficiary of a 529 plan dies, becomes permanently disabled, receives scholarship money that covered educational expenses or attends a military school the money can be withdrawn without paying the 10% penalty.

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