529 Plan Withdrawal Rules

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A 529 college savings plan, also known as a qualified tuition plan (QTP), is one of the best choices for meeting student educational expenses. Two of the 529 plan’s best features are tax-deferred growth of your contributions and later, tax-free withdrawals. But there are rules to follow if you set up a 529 college plan. If you don’t follow the rules then the IRS will get involved, which is something you want to avoid. You can also consider working with a financial advisor as you prepare for paying for your children’s higher education.

529 plan rules: Qualified education expenses

According to the IRS, qualified education expenses are amounts paid for tuition, fees and other related expenses for an eligible student and beneficiary of a 529 college plan that are required for enrollment or attendance at an eligible educational institution.