How do I distribute money from 529?
Parents can withdraw 529 plan funds by completing a withdrawal request form online. Some plans also allow 529 plan account owners to download a withdrawal request form to be mailed in or make a withdrawal request by telephone.
When must a 529 plan be distributed?
If a family receives a spring semester tuition bill in December, they may take a qualified 529 plan distribution in December to pay the tuition bill. If they wait until January (the next tax year) to pay the tuition, they should wait until January to withdraw funds from their 529 plan.
Are distributions from college savings plans taxable?
529 withdrawals are tax-free to the extent your child (or other account beneficiary) incurs qualified education expenses (QHEE) during the year. If you withdraw more than the QHEE, the excess is a non-qualified distribution. The principal portion of your 529 withdrawal is not subject to tax or penalty.
How much can I withdraw from 529 each year?
As of 2019, qualified expenses include tuition expenses for elementary, middle, and high schools (private, public, or religious). Although the money may come from multiple 529 accounts, only $10,000 total can be spent each year per beneficiary on elementary, middle, or high school tuition.
Is there a maximum withdrawal from 529 plan?
To be safe, limit your 529-plan withdrawals to your beneficiary’s total qualified higher education expenses less $4,000. If you are not eligible for the American Opportunity Tax Credit but plan on claiming the Lifetime Learning Credit, the adjustment can be for as much as $10,000.
What documentation is needed for 529 withdrawal?
Form 1099-Q
In each year you take withdrawals from a 529, the plan administrator should issue a Form 1099-Q, which reports the total distribution taken from the account in a given year, the portion of the distribution that came from earnings in the account, and the portion of the distribution that represents the original …
Can I withdraw 529 funds?
Yes. Just about every 529 plan permits you to take the funds back for yourself at any time and for any reason. Subject, of course, to tax and 10% penalty on the earnings portion. This flexibility should relieve any concerns you might otherwise have about “giving” your money away now.
How much can I withdraw from a 529 plan per year?
Up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used for tuition expenses at a public, private or religious elementary, middle, or high school.