Susan E. Thomas CPA
Newsletter
How do I prove that a 529 distribution request is for college expenses and not some other purpose?

All 529 plans have procedures to ensure that a withdrawal is being used for the beneficiary's qualified education expenses. Most plans will send a check directly to the educational institution. Others may send a check to you that you can then forward to the college. Your plan administrator can tell you what procedures you must follow when requesting a distribution.

Remember, unless the withdrawal is used for the beneficiary's qualified education expenses, the earnings portion of any withdrawal is generally subject to federal (and probably state) income taxes and a 10% federal penalty.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 plans is available in each issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits.



Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011