How can you use 529 funds

You should also review the fund's detailed annual fund operating expenses which are provided in the fund's prospectus. Banking products are provided by Bank of America, N.

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Try Edmit Free Log In. Nick Ducoff. Vemo and Edmit join forces to help st Alicia Hahn. Begin Your Research on Education and Featured Stories. Filter By Categories cost-of-college financial-aid-and-scholarships student-loans salary-and-career. Books Required coursebooks are a qualified higher education expense. Tech Computers, printers, software used to complete school work Microsoft Word, Microsoft Excel, Microsoft PowerPoint , and internet all qualify as eligible expenses.

If the beneficiary dies or becomes disabled or if he or she goes to a U. And if your child gets a scholarship, you can withdraw up to the amount of the award and spend it on whatever you want. As a journalist on the special projects team at Consumer Reports, I investigate issues that affect consumers' health, finances, privacy, and safety.

My particular focus is on helping people untangle problems with medical bills, cover steep healthcare costs, finance the skyrocketing cost of college, and manage student debt. If you have a tip, follow me on Twitter RosatoDonna. Sign In. Become a Member. Remember Me. Forgot username or password? Not a member? Need further assistance? Please call Member Services at There are smart options for using those savings that won't incur a tax bill. By Donna Rosato. September 15, Sharing is Nice Yes, send me a copy of this email.

Send We respect your privacy. What constitutes a qualified educational expense? When that question relates to savings plans , the answer may be broader than you think. In fact, recent changes to federal law under the Tax Cuts and Jobs Act of have given investors additional options for how they can spend their plan dollars. Since the plans are state-sponsored, they differ from state to state with respect to investment options and other features. States take different approaches to the income tax treatment of withdrawals.

For example, withdrawals for K expenses may not be exempt from state tax in certain states. Though the tax-free earnings on withdrawals used for such tuition expenses may not be very high — parents are likely to spend their funds on K—12 tuition immediately, leaving little time for earnings growth — the state tax deduction benefits may be worthwhile. Tax-advantaged treatment applies to savings used for qualified education expenses.

State tax treatment varies. However, advisors and investors should do their homework before assuming that state-level tax benefits are guaranteed. Achieving a Better Life Experience ABLE accounts were established in to allow people with disabilities and their families to save money for disability-related expenses. Earnings in ABLE accounts grow on a tax-deferred basis and can be withdrawn tax-free for eligible expenses such as housing, transportation and assistive technology.

Like traditional accounts, ABLE accounts can also be used to cover education expenses. Tax-advantaged treatment applies to savings used for qualified disability expenses. A account can be rolled into an ABLE account for the same beneficiary or for a different beneficiary within the same family. For instance, a family may roll money from a account benefiting one sibling into an ABLE account benefiting another sibling. Though many associate plans with four-year colleges, they can be used to fund tuition and other educational expenses at a variety of post-secondary institutions and programs, including community colleges, trade and vocational schools, graduate schools, certain apprenticship programs and qualifying online course and degree programs.

To determine whether a school or program is eligible for spending, check with its admissions office or search the U. For distributions made after December 31, , qualified education includes expenses for fees, books, supplies and equipment required for the participation of a designated beneficiary in certain apprenticeship programs.

In the digital age, education and technology go hand in hand. Such equipment includes printers, but not equipment that is intended mainly for entertainment purposes.

Computer software used for educational purposes is also covered. Adults can set up s to cover their own educational expenses, which may prove especially handy to those pursuing a change of careers. Joe Hurley, the founder of Savingforcollege. Hurley, who began his career as an accountant, now runs a farm. There are a couple of ways adults can take advantage of plans. The most direct way is to open new accounts and designate themselves as the beneficiaries. Parents can also "take over" existing plans that once benefited their children.

For instance, if a child wins a scholarship and her college expenses prove lower than originally anticipated, a new beneficiary in her family — including her parent — can be designated for the account and use its excess funds without facing a tax penalty.

Hurley paid for his horticulture courses with his children's leftover funds. That's because funds can be used to pay for college courses or continuing education classes at qualifying institutions.

Here, once again, checking with an institution's admissions office or searching the Department of Education's database can help current and future retirees determine where they can spend their funds.

Whether it's for a birthday, a holiday or for no reason at all, relatives and friends can use plans to give gifts to the children in their lives. Grandparents, aunts and uncles or anyone else wishing to help fund a child's education may contribute to an existing account or open a new one and name the child as the beneficiary.