529 Questions - Common Questions About Withdrawals
529 Questions – Common Questions About Withdrawals

Andrea Williams wrote a great article on 529 Plans covering 4 questions that people commonly run into.  She quoted me in the article and you can read about it below:


Brief Synopsis:

1) Are Laptops/Computers a Qualified Expense? – Laptops, desktops, and in my opinion, any high dollar equipment for school are only qualified if they are required for the class.  For example, if you are taking a cooking class and they provide mixers and you are not required to buy one, you can’t buy that Kitchen Aid Mixer you have been looking at with your 529 funds.

2) What if the student earns a Scholarship and no longer needs the Funds? –  You can withdraw funds for the amount of scholarship and avoid a penalty but you will pay pro-rata capital gains on any tax deferred earnings.  Alternatively, you can change beneficiaries and use it for another students education expenses.

3) Can you pay for Off-Campus Housing? – Yes but you need to contact the school to determine what the Federal Allowance for financial aid purposes for off campus housing.  You cannot exceed that amount.

4) When is the right time to Withdraw Funds? – You will want to withdraw funds in the tax/calendar year you pay the expenses.

** The information on this website is intended only for informational purposes. Investors should not act upon any of the information here. Reh Wealth Advisor clients should discuss with their advisor if any action is appropriate.

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