529 Withdrawal Rules Room And Board

In general this includes costs of attending an eligible college or university. Colleges typically have a room and board budgets for students who live on campus in college owned or operated housing for. Paying for off campus housing with a 529 plan your student s room and board could be covered tax free for an entire 12 month lease even if he or she only takes classes for nine months of the year.

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529 plans offer tax free withdrawals when the funds are used to pay for qualified education expenses.

529 withdrawal rules room and board.

Room and board includes the cost of housing and the cost of a meal plan. Washington the internal revenue service and department of the treasury today announced their intent to issue regulations on three recent tax law changes affecting popular 529 education savings plans pdf. Is the cost of off campus room and board a qualified expense for 529 distributions. The student must be enrolled as a regular student on at least a half time basis.

Decide how to withdraw the funds. If a 529 plan distribution is used to pay for room and board it is a tax free qualified distribution in certain circumstances and a taxable non qualified distribution in other circumstances. Ir 2018 156 july 30 2018. Understanding 529 withdrawal rules you saved smart now withdraw smart too.

For the first two years she stayed in the dormitory. It s important that withdrawals you take from your 529 savings account match the payment of qualifying expenses in the same tax year. The caveat here is that your off campus housing costs can t be higher than you d pay to live on campus if you want to use 529 funds. Chris gullotti cfp april 8 2020.

Notice 2018 58 pdf addresses a change included in the 2015 protecting americans from tax hikes path act and two changes included in the 2017 tax cuts and. Whether you live on campus or off you can use your 529 plan spending for your room and board expenses. Starting january 1 2018 this definition is expanded to include up to 10 000 in k 12 tuition expenses per beneficiary per year. Room and board costs make up a large portion of a student s total college bill second only to tuition you can use a 529 plan to pay for room and board but only if certain requirements are met.

But if you used 529 plan withdrawals to pay for tuition or room and board you could be hit with a tax bill if you don t take this action within 60 days. My client has been using 529 plan distributions to pay for part of his daughter s college education costs including room and board. A qualified tuition program qtp also referred to as a section 529 plan is a program established and maintained by a state or an agency or instrumentality of a state that allows a contributor either to prepay a beneficiary s qualified higher education expenses at an eligible educational institution or to contribute to an account for paying those expenses. But if you are using your 529 plan for room and board expenses it s smart to keep those receipts.