Susan E. Thomas CPA
Can 529 funds be used for general living expenses while at college?


No. The federal definition of "qualified education expenses" that most colleges use doesn't include general living expenses (e.g., phone charges, transportation). To be covered, expenses must be for something required for enrollment and attendance (e.g., books, a computer), and most living expenses don't fit into this category. But gray areas exist. For instance, the grocery expenses of students living off-campus may qualify as board charges, so you should address questions like this to your plan administrator. Withdrawals for nonqualified expenses will generally be subject to income tax and an additional 10 percent federal penalty tax on earnings.

Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011