For those with 529 Plans.....

J

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 Authorize all or a portion of the Account balance to be withdrawn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.....
 
OK, so where does one obtain the "costs of advanced education attributable to that attendance"?

Maybe it is defined in the contract that comes in the BFE?
 
Thank you for addressing this subject. I was wondering also if 529 plans could be used for these expenses.
 
bearhunter66 said:
OK, so where does one obtain the "costs of advanced education attributable to that attendance"?

Maybe it is defined in the contract that comes in the BFE?
Click to expand...

I believe the relavent academy can give you that info. I saw an old post from last year (I think) referencing USAFA giving this info out in some docs prior to induction. I plan on asking USNA if it isn't in the info that will be sent to DS in mid-April.
 
I'm a parent of a '17 Mid. I found something called the "Midshipman Stipend and Annual Budget Book" online. It is very informative and helpful. I'd post a link here, but I don't have enough posts to be able to do that yet. So, Google is your friend! :rolleyes:

Obviously, the details will change a bit. But, basically what it says is that the ACE Loan (about $8500) can be paid with 529 Plan funds, and that there are about another $8500 in "educational expenses" over the course of the four years that could also be paid using these funds. The instructions on how to get the funds into your Mid's account are in the Budget Book.

The deal we made with our DS was that we'd pay off the ACE Loan, but since he is getting paid by the Navy he would pay his other expenses. (We'll see how that works out; I expect there may be some things he needs help with.) I just had Schwab cut me a check for the ACE Loan, endorsed it to the USNA, and sent it with a cover letter indicating what it was to be used for.
 
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