529 expenses

bigJ

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Joined
Dec 30, 2016
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24
Hi, I understand that money from a 529 account can be used to buy school supplies, as well as pay for tuition room and board. Does anyone know if it is kosher for money from these accounts to be used to pay for the clothing and supplies needed for Sea Year?

Thanks
 
Unlike USMA, USAFA and USNA, the U.S. Merchant Marine Academy is considered by the IRS as an eligible institution to qualify for 529 funds.
Source:
https://www.irs.gov/credits-deducti...d-income-tax-credit/eligible-educational-inst

USMMA has a page dedicated to 529 plans:
https://www.usmma.edu/admissions/financial-aid/scholarships

So as long as you use the funds for qualified higher education expenses (QHEE) which include the following, you should be okay. The clothing and supplies must be REQUIRED for USMMA sea year to qualify as QHEE.

For more IRS info:
https://www.irs.gov/newsroom/529-plans-questions-and-answers
 
Thanks, I'm unsure what is actually 'required' vs what is 'highly recommended'. I have lists from the academy on what to bring....does that mean they are required?
 
I would use the 529 money on what is considered "required."

For example, the IRS would likely have no problem paying for a lab coat that is required for Chemistry lab, but they would certainly balk at using the funds for a private tutor for that same chem lab class.

Optional items would likely be denied if you were ever audited by the IRS.
Ask your advisor what would be deemed "required" and explain that you are using 529 plan funds accordingly.
 
Thanks, I'm unsure what is actually 'required' vs what is 'highly recommended'. I have lists from the academy on what to bring....does that mean they are required?

As I've said before related to going out for sea year ... lay out everything you need, then put half of it back and you will still have too much.

FYI. . .
 
Yes...from my observations 529 is authorized....

Also, if your family has it, you can use the post 911 education bill, but the return on investment is a lot lower given the federal government already pays for most.

Layman opinion here..I am not an expert.
 
Resurrecting this older post on 529's. (Not scholarships, these are savings accounts that were set up for the student). Upon calling the KP finance and financial aid offices, it doesn't sound like you can have the 529 account send a check directly to them like other institutions. This does not seem to match what the logging -in instruction say as they seem to indicate 529's can be used. (Note - KP does not issue a 1098 form since they don't charge tuition, room, board). Upon calling, I was told you pay out of pocket to the NEX, & the various fees; Then just have the 529 distribution put in your own account, and report it in your taxes as an education expense. (similar to buying a laptop for use at another school). Has anyone experienced a different of better way of handling 529's at KP? This may be fine, but again, it doesn't seem to match what the Logging-in instructions stated.
 
There is an extensive list of FAQ's including one about 529's at FAQ's. The discussion of 529's is at the very bottom of the webpage. Note the document is dated May of 2021.
 
There is an extensive list of FAQ's including one about 529's at FAQ's. The discussion of 529's is at the very bottom of the webpage. Note the document is dated May of 2021.
Yes, thanks, that FAQ states:
I have a 529 college savings plan (or other college savings plan) for my child, may I use these funds to cover the Cost of Attendance at USMMA? Absolutely! USMMA is a fully accredited four year degree awarding university and accepts funds from any/all college savings plans. If your 529 Plan requires documentation to release your savings, please contact the Office of Financial Aid for further details.

The Logging-In instruction has some similar language. The question is more around having the fund send a check directly to the institution to cover costs vs the individual withdrawing it to their own account, and paying expenses out of pocket. I read "accepts funds from college savings plans" as the fund cutting a check to the school, which I strongly prefer (without getting into all the reasons why). But it didn't sound like KP wants to receive 529 checks or normally does.
 
Yes, thanks, that FAQ states:
I have a 529 college savings plan (or other college savings plan) for my child, may I use these funds to cover the Cost of Attendance at USMMA? Absolutely! USMMA is a fully accredited four year degree awarding university and accepts funds from any/all college savings plans. If your 529 Plan requires documentation to release your savings, please contact the Office of Financial Aid for further details.

The Logging-In instruction has some similar language. The question is more around having the fund send a check directly to the institution to cover costs vs the individual withdrawing it to their own account, and paying expenses out of pocket. I read "accepts funds from college savings plans" as the fund cutting a check to the school, which I strongly prefer (without getting into all the reasons why). But it didn't sound like KP wants to receive 529 checks or normally does.
We are trying to figure out what IS and what IS NOT a qualified expense. I'm guessing the computer package IS but what about the "plebe kit"? Anything else on the list from the LIB a qualified expense?
 
We are trying to figure out what IS and what IS NOT a qualified expense. I'm guessing the computer package IS but what about the "plebe kit"? Anything else on the list from the LIB a qualified expense?
The logging in instructions for the Class of 2026, with respect to the "Plebe Kit", very specifically state "Plebe Candidates entering with the Class of 2026 are required to bring with them the EXACT items listed below by quantity, size, and vendor. These items are required for uniformity and no deviation will be permitted."

Based on that I would suspect that the Plebe Kit would be an allowable expense. Ultimately it is purchased from the USMMA NEX facility. How 529 purchases work I don't know. My suspicion is you would pay out of pocket to the NEX facility and then seek some form of reimbursement from within the 529 guidelines. I also see, again from the 2026 instructions, "The cost of this package is $654.37. Please contact the USMMA NEX with questions at(516) 726-6177 or email BEMUSMMA@nexweb.org." I would verify the phone number and email with your specific 2027 instructions and perhaps make direct contact.

By the way, just my opinion, that plebe kit is a bargain, especially when you consider that it includes "... the EXACT items listed below by quantity, size, and vendor."
 
The logging in instructions for the Class of 2026, with respect to the "Plebe Kit", very specifically state "Plebe Candidates entering with the Class of 2026 are required to bring with them the EXACT items listed below by quantity, size, and vendor. These items are required for uniformity and no deviation will be permitted."

Based on that I would suspect that the Plebe Kit would be an allowable expense. Ultimately it is purchased from the USMMA NEX facility. How 529 purchases work I don't know. My suspicion is you would pay out of pocket to the NEX facility and then seek some form of reimbursement from within the 529 guidelines. I also see, again from the 2026 instructions, "The cost of this package is $654.37. Please contact the USMMA NEX with questions at(516) 726-6177 or email BEMUSMMA@nexweb.org." I would verify the phone number and email with your specific 2027 instructions and perhaps make direct contact.

By the way, just my opinion, that plebe kit is a bargain, especially when you consider that it includes "... the EXACT items listed below by quantity, size, and vendor."
Thanks. I'm pretty comfortable the 2 kits are qualified expenses as you mentioned. I did call the NEX, and they said they would accept a 529-fund check (made out to NEX w/ student name in the memo line) so will give it a try. Appreciate the assist.
 
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