Section 529 Plan Distributions

The 529 plan custodian has no way of knowing whether this distribution is qualified or non qualified so none of that information is included on the 1099 q.

Section 529 plan distributions. Parents can withdraw money from a 529 plan at any time for any reason. The recontribution must be made no more than 60 days after the date of the refund. One of the tcja changes allows distributions from 529 plans to be used to pay up to a total of 10 000 of tuition per beneficiary regardless of the number of contributing plans each year at an elementary or secondary k 12 public private or religious school of the beneficiary s choosing.

The balance does not provide tax investment or financial services and advice. Rollovers to an able account. The 529 plan manager or custodian will complete this form and send the student parent and irs a copy.

The information is being presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and. Qualified expenses for a 529 plan. Instead the burden of calculating qualified education expenses and thus calculating the taxable and non taxable portions of the 529 distribution is solely the responsibility of the tax payer.

To enjoy the full tax benefits of a 529 plan funds must be used to pay for qualified higher education expenses. The recontributed amount cannot exceed the amount of the refund. If a distribution from a 529 plan is later refunded by an eligible educational institution a recontribution can be made to the 529 plan.

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. The person or other entity such as a financial institution that manages your 529 plan is responsible for reporting distributions to the irs and to you by issuing irs form 1099 q payments from. Most qualified expenses cannot exceed the cost estimates made by the school that the 529 beneficiary will be attending.

This includes 529 distributions used to pay for airfare and other travel costs college application or testing fees health insurance or room and board costs beyond the college s cost of. However the earnings portion of a non qualified distribution will incur income tax and a 10 penalty.