529 funds and $2000 deposit

Discussion in 'Military Academy - USMA' started by jebdad, Mar 3, 2015.

  1. jebdad

    jebdad Member

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    I know this has been discussed before, but my search cannot find the previous thread. Has anyone used 529 funds to pay the $2000 USMA deposit. I would think it would be permissible as it is for books, computer, uniforms, etc.

    Any help is appreciated.
     
  2. Craig

    Craig Member

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    I plan to. Actually order the check this morning. I have done for DD at USNA to pay down her loan.
     
  3. MemberLG

    MemberLG Member

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    Should consult your accountant, if you have one.

    My quick research shows, one can use the 529 plan, but you will have to pay taxes on the earning

    http://www.usma.edu/parents/siteassets/tax letter to parents2014.pdf

    "Again, some of our Cadets and Cadet Candidates are fortunate enough that parents, guardians and other family members established college funds for them when they were young. If there was a distribution from the plan in 2014, you will receive a Form 1099Q. The Cadet or Cadet Candidate must report this income on their 2014 tax return. Additionally, they need to know the breakdown of how much represents principal invested in the plan vs. earnings of the plan. The distribution of amounts contributed to the plan is not taxable; only the income earned."

    And

    "In order to legally claim any of these education tax benefits, you must have “qualified education expenses” from an “eligible educational institution.” The IRS definition of an “eligible educational institution” is generally any accredited public, nonprofit, or proprietary (private) college, university, vocational school, or other postsecondary institution eligible to participate in a student aid program administered by the Department of Education. USMA (USMAPS) does not accept any federal financial aid, and is ineligible to participate in a student aid program under the Department of Education."

    From IRS 970

    "Eligible educational institution. For purposes of a QTP, this is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution."
     

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