How To Make Withdrawals From Your 529 Plan

From Forbes.com

By Brian Boswell

Once again it is the time when students flood back to college from their summer jobs, vacations, internships, and other activities. If you are one of the families that has had the luck and foresight to fund a 529 account, the big question is how you actually make the withdrawals, to maximize your tax benefit and savings, and minimize the impact to any financial aid for which you might qualify.

Because 529 plans are used by people of all income brackets, and financial situations vary widely, the plans can be quite complicated to coordinate with federal and school financial aid, tax incentives, and other funding sources.

What You Can Pay For With A 529 Plan

If you are a 529 account owner, than you may already know you can make tax-free withdrawals for QHEEs (qualified higher education expenses). There are five categories of QHEE:

  1. Tuition, fees, books, supplies, and equipment are all qualified expenses.
  2. Room & board, including rent on or off-campus, and food.
  3. Computers, peripheral equipment, computer software, and internet access charges are all considered qualified expenses.
  4. Special needs services and equipment incurred in relation to enrollment or attendance at an eligible institution.

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