529 Account distributions and completing tax forms

MomCat2
Mon, 14 Mar 2011 22:02:12 +0000

ANd another FYI -
If withdrawals from a 529 are used for qualified educational expenses (which for 529 funds includes room, board, and - for 2009 and 2010 only - the purchase of a computer, internet access, and software used for educational purposes) then NO tax is due. Zero, zip, nada. Neither regular tax nor the 10% penalty.

If a non-qualified withdrawal/distribution is made, then ONLY the earnings portion is taxed.