Paying through 529 plan

charlieschm
Sun, 21 Nov 2010 14:37:51 +0000

I believe you just tell the 529 you want a withdrawal, write a check to the college, and then keep copies of all receipts and statements. The 529 plan will report it to the IRS and at tax form time you will need to provide the proof that it went to a legitimate expense.

One of the great things about 529 is that it gives you the most flexibility in using the money. You can use it for room, board and a laptop, in addition to tuition and fees.

Also, most states give a state tax deduction for money put into a 529. In my state, it is possible to put money into the 529, and then a month later get a withdrawal for college expenses and still get a state tax deduction.