Education Planning

Understanding the Taxation of 529 Plans for Non-Qualified Expenses or Closure

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. Named after Section 529 of the Internal Revenue Code, these plans are sponsored by states, state agencies, or educational institutions and offer tax benefits when used for qualified education expenses.But what happens if you have to withdraw money for reasons other than qualified education expenses? Or what happens if you no longer want or need the 529 plan and want to close it?Using 529 funds for non-qualified expenses can result in tax consequences. This article will delve into the taxation aspects, including the 10%…
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10 Ways a 529 Can Be Used

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. These plans are sponsored by states, state agencies, or educational institutions and offer flexibility and a range of benefits to families aiming to secure their children's educational future. This guide explores not only the domestic uses of a 529 plan but also its applicability to international educational pursuits.1. Tuition and FeesThe primary use of a 529 plan is to cover tuition and fees at eligible educational institutions. This includes:Colleges and Universities: Both in-state and out-of-state, public and private institutions.Community College: Community college schools are eligible.Graduate…
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