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Subject Author Date
529 Withdrawal Daniel David Palmer 12-30-2007
Posted by Daniel David Palmer on December 30, 2007, 2:40 pm
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 My high school senior recently got accepted to a top-tier college for fall
2008. I have saved about $300,000 in a 529 account for her. Costs will be
about $50,000 per year for 4 years plus beer and Cancun money.

How do 529 account withdrawals work taxwise? What records do I need to keep?
I plan to withdraw about $60,000 per year...$50,000 for the fixed costs to
the university (tuition, dorms and food) plus about $10,000 for travel home,
clothes, computer etc etc. Will the 529 plan (Pennsylvania TAP "guaranteed
savings plan") send me a 1099 type form for the withdrawals? If they send
some of the money directly to the university, do they still 1099 me for that
amount or for only the amount being sent to me directly to cover the out of
pocket expenses? What out of pocket expenses qualify for 529 tax free
withdrawals? I guess beer and Cancun probably do not unless consumed on
campus and the trip is educational. What about college football tickets that
are certainly recreational but are also part of college life?

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Posted by dpb on December 30, 2007, 10:53 pm
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 Daniel David Palmer wrote:
...

> How do 529 account withdrawals work taxwise? What records do I need to keep?
...
> ...Will the 529 plan ....send me a 1099 type form ...

http://www.irs.gov/publications/p970/ch08.html#d0e9840

Basically, for "qualified expenses" there is no tax consequence. You
need documentation the funds went to a qualified expense. You will
receive a 1099-Q for withdrawals.

All the above (and more) explained at the above link...

--

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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