Using College Savings for AFA Expenses

Discussion in 'Air Force Academy - USAFA' started by Ashli McDonald, Apr 27, 2011.

  1. Ashli McDonald

    Ashli McDonald New Member

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    My parents have a savings account for my college expenses, but the only way to use those funds for Academy expenses, like plane tickets, etc. is to have the Academy purchase them so that it's an official college expense. Does anyone have any experience with this?
     
  2. urbonman6

    urbonman6 Member

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    finances

    That is a very good question. I think that would be worth calling your admissions counselor and see if he or she has the info. or knows who can better assist you.
     
  3. philmont

    philmont Member

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    There are limitations as to what a 529 college savings plan can be used for... but one thing I was told by our 529 plan representative is that if the student that the parent is saving for gets a full college scholarship then that money can be cashed out without the penalty. It can also be used for a different person's college expenses-like a sibling or cousin. Just something they might want to ask about.
     
  4. tedsnyder63

    tedsnyder63 Member

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    I think its more of a CPA question...however from
    http://www.irs.gov/publications/p970/ch08.html
    Qualified tuition programs (QTPs) are also called “529 plans.”

    Exceptions. The 10% additional tax does not apply to distributions:
    Made on account of the attendance of the designated beneficiary at a U.S. military academy (such as the USNA at Annapolis). This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U.S. Code) attributable to such attendance.

    But as they say, check with your qualified tax advisor...
     
  5. Ashli McDonald

    Ashli McDonald New Member

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    Thanks for your input! I'm hoping to get a call back from my counselor today. I'll post the outcome.
     
  6. AHS74

    AHS74 Member

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    I checked on this in the past. Travel is not an eligble expense. If you google 529 plans you can find eligible expenses. Basically, it can't be used for much of any Academy expensives. Once I am sure my DD is staying at the USAFA I am transfering her 529 to her brother.
     
  7. Falcon15

    Falcon15 Parent

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    Even though they are essentially paying for those expenses through a deduction from their pay? I wondered if that made any difference.
     
  8. AHS74

    AHS74 Member

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    Just computer, books and supplies that are required by the AFA and are paid for by the cadet. Again, unfortunately transportation is not eligible.
     
  9. lotsofbooks

    lotsofbooks Member

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    Our daughter wasn't able to use hers during her academy days, but she is using it to help with the graduate school on base she's doing while working. (the AF has some tuition assistance which she uses, but she's appreciated having the fund for the books and other required fees. Anything required for the class can be used from the 529 plan.) She even did some elective type distance education courses that didn't get tuition assistance from the AF. For our state they let you keep it until you're 28, at that point it has to be transferred to someone else or cashed out. I think having it really encouraged her to get going on grad school, knowing that she wouldn't be able to keep it indefinitely.

    She's transferring bases so will have to transfer grad school programs unfortunately, but she found out that 25% of the credits can be transferred in to the next program, so she only attained that many credits. She's hoping to stay at the next base long enough to complete the 75% of credits. The classes are right on base, after the work day finishes. The teachers have been very good, and I think her bosses have been really supportive of her doing this.
     
  10. Ashli McDonald

    Ashli McDonald New Member

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    I came to the same conclusion. Thanks everyone!
     
  11. vshun

    vshun Member

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    Sorry to revive an ancient thread, but I searched and could not find more recent posts relevant to the topic. Is there more up to date info than the one quoted here for Cost of attendance 6 years ago, specifically this table, found in one of the links to 2010 Jan newsletter?
    Expense Freshman Sophomore Junior Senior
    Uniforms 4,020 360 590 790
    Computer 2,312 72 72 66
    Personal Service Fees 1,474 405 405 390
    Arts and Athletic Fees 170 170 170 170
    Media and Textbooks 2093 1,269 1,269 1,355
    Total $10,069 $2,276 $2,506 $2,771

    I looked through the last year of newsletters and could not find anything of that sort.

    Thanks.
     
  12. AJC

    AJC Member

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    The money in one child's 529 can be transferred to a siblings 529.
     
  13. DTrain1986

    DTrain1986 Member

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    Do some "Googling" on the subject. Each of the Service Academies has published a number indicating the value of a year's education...in the neighborhood of $45K/year. You can withdrawal that from the 529 and pay no penalty in a single year. You will still have to pay tax on the cap gains.

    Without penalty or Cap gains tax, you can use funds to pay for computer, printer and other computer related peripherals like software, external drive; books and required fees. Maybe more. There's good info in the public domain.

    I draw the line at uniforms. For me, that expense doesn't comply with the spirit of the law.

    At the end of the day, you need to feel comfortable justifying expenses to the IRS. Save those receipts!
     
  14. VelveteenR

    VelveteenR Just gathering dust in the nursery...

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    Both our financial planner and our accountant told us to simply take a disbursement from the 529 each semester in the amount we would have paid had the academy actually been sending us a bill. So, we divided the amount of the "scholarship" by 8 (semesters) and are withdrawing that amount from the 529 twice a year. The money just goes into a private account and we use it as needed for son's travel and other expenses. The excess is ours to keep minus the tax on the gain as @DTrain1986 noted above. Our accountant said that this withdrawal schedule is both reasonable and justifiable as the law is not specific about disbursements.

    According to the Military Family Tax Relief Act (irs.gov):

     

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