JShawshank
5-Year Member
- Joined
- Nov 2, 2013
- Messages
- 256
I was looking into using 529 plan funds to pay for DS's initial expenses (rather than the interest free loan) and found the following (for NY State and assume same applies in other states):
Receipt of a Qualified Scholarship/Attendance at a Military Academy
"If the Beneficiary receives a Qualified Scholarship, you may choose one of the following actions:
1. Select a new Beneficiary.
2. Withdraw from the Account up to the amount of the Qualified
Scholarship or, in the case of attendance at a military academy, up
to the costs of advanced education attributable to that attendance.
3. Authorize all or a portion of the Account balance to be withdrawn
and paid to the Beneficiary without imposition of the Federal
Penalty. However, the earnings portions will be subject to any
applicable federal income tax at the recipient’s tax rate, and
recapture of New York State tax deductions previously taken.
If you select a new Beneficiary who is a Member of the Family of
the former Beneficiary, you will not owe any additional federal or
New York State income tax. See Section 8. Maintaining Your
Account—Substituting Beneficiaries......."
I'm glad someone was thinking when the 529 plans were created.....
Receipt of a Qualified Scholarship/Attendance at a Military Academy
"If the Beneficiary receives a Qualified Scholarship, you may choose one of the following actions:
1. Select a new Beneficiary.
2. Withdraw from the Account up to the amount of the Qualified
Scholarship or, in the case of attendance at a military academy, up
to the costs of advanced education attributable to that attendance.
3. Authorize all or a portion of the Account balance to be withdrawn
and paid to the Beneficiary without imposition of the Federal
Penalty. However, the earnings portions will be subject to any
applicable federal income tax at the recipient’s tax rate, and
recapture of New York State tax deductions previously taken.
If you select a new Beneficiary who is a Member of the Family of
the former Beneficiary, you will not owe any additional federal or
New York State income tax. See Section 8. Maintaining Your
Account—Substituting Beneficiaries......."
I'm glad someone was thinking when the 529 plans were created.....