Qualified withdrawals cannot exceed your child’s QHEE’s. 529 Plan Withdrawal RulesĪccording to the IRS, withdrawals from 529 Plans are tax-free “when used for qualified education expenses of the designated beneficiary,” as described above. However, all of these come with exceptions. In addition to tuition, qualified expenses include room and board, books and supplies, computers and related equipment, as well as money used to repay student loans (capped at a $10,000 maximum lifetime limit per student). Tuition payments must be for a degree program or other recognized academic credit at the college level. Qualified education expenses are the amounts you pay for tuition, fees, and additional related expenses for eligible students, at eligible educational institutions. ![]() ![]() One of the first things you need to do is get familiar with the terms “Qualified Educational Expenses (QEE)” and “Qualified Higher Education Expenses (QHEE).” These are the IRS guidelines for spending your 529 Plan savings on legitimate expenses. ![]() That’s a lot easier if you’ve been stashing away money in a tax-free 529 College Savings Plan, but make sure you handle the 529 Plan withdrawals properly to avoid taxes, penalties, and headaches. Your son or daughter has been accepted to college, and now you get to pay (some of) the bill.
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