The money can also go toward expenses for room and board, as long as the student is enrolled in school at least half-time. That includes tuition, fees, books, supplies, and computers. You can use funds from a 529 account for a wide range of qualified education-related expenses. Here’s what you should keep in mind as you prepare to make withdrawals from a 529 college savings account.
#529 eligible expenses plus#
A mistake could be costly: You could get hit with a 10 percent penalty, plus you’ll have to pay interest on the earnings for any funds that you use for the wrong kinds of expenses. If you have children heading to college this fall and plan to tap 529 funds to pay expenses, it’s important to withdraw the money correctly. A 2021 survey found that even among those who do, 67 percent didn’t know about possible tax benefits and other features of 529 accounts. Only 40 percent of Americans recognize 529 plans as a way to save for college, according to a recent survey by financial services firm Edward D. And though money has continued to flow into these plans-assets stood at $431 billion in the first quarter of 2022, according to ISS Market Intelligence-many families still don’t fully understand how these accounts work. Withdrawing funds from a 529 isn’t as straightforward as it sounds. But they may not be as savvy about how best to take funds out.
Parents who’ve been saving for their children’s college expenses for years know that putting money into a tax-advantaged 529 college savings account is easy, once the account has been set up.
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