There are a lot of rules when it comes to 529s, so it’s extra important to make sure you’re using them correctly and staying within the boundaries of the benefits. Earnings on non-qualified withdrawals are taxed as ordinary income and may be subject to a 10% Federal Income Tax penalty, so it’s important to stick to this clear list of qualified expenses.
Using your hard-earned savings as efficiently as possible is the goal, so in this episode, I will lay out a super clear list of expenses that are qualified and keep you safely within the limits of the fund. Knowing exactly what you can use these funds for will hopefully help you plan ahead and make the best use of your savings.
Listen To The Episode Here:
What You’ll Learn:
- How to avoid paying unnecessary taxes on 529 withdrawals.
- Why it’s so important to be careful about what you spend 529 funds on.
- Properly using funds for tuition, rent, and food.
- How to use for academic fees and what kinds of fees are not eligible.
- Computers, software, and internet expenses that are covered.
- K-12 tuition and why you need to check with your state’s requirements.
- How to use these plans to help with loan repayment and apprenticeship programs.
Ideas Worth Sharing:
- “One of the main advantages of a 529 plan is the ability to grow your education savings tax-free.” - Regina McCann Hess
- “Your 529 plan funds can be used towards tuition as long as the school is eligible for federal student aid. The same is true for graduate school or even some schools abroad.” - Regina McCann Hess
- “If the school does not supply computers, purchasing one on your own is considered a qualified expense.” - Regina McCann Hess
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