Quick Reference Chart: 529 Plan Qualified & Non-Qualified Expenses

You've put in the hard work of saving for college, and now it's time to start using those 529 plan assets to help with a family member's education-related costs. But before you begin withdrawing those funds, it's important to understand the difference between qualified and nonqualified expenses.

The charts below provide an overview of some of the most common qualified and nonqualified expenses.

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Qualified Expenses

EXPENSE:	REQUIREMENTS:	CONSIDERATIONS:
Tuition & fees	College must be accredited and eligible for U.S. Department of Education's student aid program. K-12 eligible (eligibility varies by state) Registered apprenticeship program	Limited to $10,000 per year for K-12 Some foreign institutions qualify
Books, supplies & equipment	College courses only Must be required for the course Required equipment, including tools for apprenticeship programs	Items may be purchased from anywhere (e.g., Amazon). Keep evidence of requirement (e.g., course syllabus).
Special needs services	College courses only Must show connection to enrollment or attendance
Room & board	College courses only Maximum amount is the greater of either 1) actual charge for residence in schooloperated housing or 2) annual"financial aid cost of attendance" room and board amount for that school.	Must be enrolled at least halftime (credit hours defined by school) For off-campus housing, contact school's financial aid office forapplicable cost of attendance amounts.
Compuers, computer hardware/software & internet access	College courses only Must be used primarily by the 529 beneficiary and during years of enrollment	Software should be predominantly educational in nature.
Repay student loan debt	Principal and interest payments toward qualified education loans of the 529 plan beneficiary or siblings of the plan beneficiary	Lifetime limit of $10,000 for the plan beneficiary and additional $10,000 per sibling of the plan beneficiary Interest that is paid with 529 funds will not be eligible for student loan interest deduction.

Non-Qualified Expenses

EXPENSE:	CONSIDERATIONS:
Transportation & travel costs	Often a concern for out-of-state students Even if for travel to and from campus during holiday times, no travel costs qualify
Health insurance	Not qualified, even for a health plan provided by the student's school
Extracurricular activity fees	Only tuition costs and fees are qualified; additional activity fees are not
Student loans	Student loan payments in excess of current qualified expense limits
Application & testing fees	Preparatory fees are not qualified 529 distributions limited to tuition and fees associated with current enrollment

Please note: Just because an expense is nonqualified, it doesn't mean the 529 plan funds cannot be considered a source of payment. The main consequence of paying nonqualified expenses from the 529 plan is that the gains portion of that distribution will be taxed, and it could be assessed a 10%penalty.

For more information on 529 plans (referred to as "Qualified Tuition Programs"), and for examples of tax and coordination calculations, see the Qualified Tuition Programs section of IRS Publication 970.

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This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate ond useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

Securities and advisory services offered through Commonwealth Financial Network", Member FJNRA/SIPC, a Registered Investment Adviser. These materials were sourced from Broadridge Investor Commvnications and are general in nawre and do not address yovr specific situation. For your specific investment needs, pleose discuss your individval circumstances with yovr representative. Weiss, Hole & Zohonsky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages shovld be constrved as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341. https://www.whzwealth.com © 2021 Commonwealth Financial Network•

Qualified Expenses

EXPENSE:

REQUIREMENTS:

CONSIDERATIONS:

Non-Qualified Expenses

EXPENSE:

CONSIDERATIONS: