![]() ![]() Withdrawals taken from a 529 plan must also be taken in the same calendar year the expense is incurred. For example, while the parent might pay the bill, it is the student that owes tuition. Qualified expenses – even if paid for by the account owner – need to be incurred by the student in relation to enrollment or attendance at a university. However, the account owner would still be liable for income tax on earnings. There are some special situations where non-qualified withdrawals can be made without incurring the additional 10% penalty on earnings. (Photo by Jeremy Papasso/Digital First Media/Boulder Daily Camera via Getty Images) MediaNews Group via Getty Images This is to prevent “double-dipping” of federal tax benefits.
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