Responsive Ad Slot

Popular Posts

Latest Posts


What College Expenses Do 529 Plans Cover and Not Cover?

May 27, 2012

For the last 18 years you have invested in a 529 Plan every month. Now that your college student is about to enter college for the first time you will be accessing that 529 account. There are so many different things you need to pay for this coming school term and you are not sure what your 529 plan is allowed to pay for. The following is a list of what is covered and what's not covered under a 529 plan.

Here are a few guidelines, based on information in Publication 970 from the IRS, which gives detailed guidance on qualified expenses.

What's Covered

  • Tuition and required fees are covered in full.
  • Room and board, if the student is enrolled at least half time. However, such expenses must be not more than the greater of: 1) the allowance for room and board, as determined by the school, that was included in the cost of attendance; or 2) the actual amount charged if the student is residing in housing owned or operated by the school.
  • Food: If you spend a certain amount for a meal plan, that entire amount can be deducted, even if used for coffee or ice cream and not a full meal. Weekend meals can also be included if the dining halls are not open.
  • Books and supplies: Any fees associated with purchasing school textbooks are considered qualified, as are required equipment or supplies such as notebooks and writing tools.
  • Computers/laptops, but only if required by the school. If required, Internet fees and PDAs or “smartphones” may also qualify. The Savings Enhancement for Education in College Act (H.R. 529), currently under consideration by Congress, would expand this definition to apply to all computer technology used by the student.
  • Special needs services required by special-needs students that are incurred in connection with enrollment or attendance at school.

What's Not Covered 

  • Student loans: Interest on or repayment of student loans is not considered a qualified expense by the IRS.
  • Insurance, sports or club activity fees, and many other types of fees that may be charged to students but are not required as a condition of enrollment.
  • Transportation to and from school.
  • Concert tickets or other entertainment costs, unless attendance is required for a course or curriculum.

Note that expenses must apply to a qualified college, university or vocational school for post secondary educational expenses. Withdrawals used for qualified expenses are generally free from federal income tax. Tax treatment at the state level may vary, and may depend on your residency status in that state.

Check before you spend funds from a 529 plan. Taxes and a possible 10 percent penalty apply to all distributions that are not considered

Updated Benefits

Congress Approves Computers as a Qualified Higher Education Expense for 529 Plans - See more at Here


  1. what if my child doesnt want to attend college who would get her money

  2. You have a few choices. You could transfer the money to another child or yourself. Grandchildren, nieces and nephews, etc. could use this money. If you have no one that can use it, you could always close the account and have the money returned to you.

    But there would be taxes to pay on any growth.

  3. The usefulness of articles like this is drastically reduced when there is no date of publication on it. Obviously the gov changes rules and I want the most up to date info.

  4. Thanks for the Awesome Information in the post

    Govt Jobs

  5. UPPSC Allopathic Medical Officer Recruitment 2016

    Really appreciate you sharing this post.Much thanks again. Fantastic......

  6. lots of useful information. You're doing a great job.

  7. This is very nice post, i like it very much..
    latest freshers Jobs

  8. very good information thank you for the website
    sarkari result

  9. thanks you Right information for the website
    thanks you
    Latest information

  10. Very great article.. thank you..
    visit my site : adeliazahrah

  11. Thanks for the useful information in the article

    Bank Jobs In India

  12. its really helped me alot thanks for providing such a great information

    home tuitions in hyderabad

  13. Awesome article posted. Like your thoughts posted in article.
    govt jobs

  14. 123freshers is one of the biggest Indian Job Site so here you will getGovt jobs 2017so

  15. Sarkari Recruitment is one of the biggest Indian Job Site so here you will getGovt jobs 2017 Uttar pradeshso

  16. Sarkari Recruitment is one of the biggest Indian Job Site so here you will getUPPSC Jobs 2017so

  17. Very informative and interesting post. It really helpful for visitors. Thanks for sharing.
    Android apps

  18. Sarkari Recruitment is one of the biggest Indian Job Site so here you will getBEL Jobs 2017so

  19. Sarkari Recruitment is one of the biggest Indian Job Site so here you will getBPCL Jobs



More Resources

Our Sponsors

Blog Archive