Whitehouse & Company CPA's
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How do I prove that a distribution request is for my child's college expenses and not for some other purpose?

Answer:

All 529 plans have procedures to ensure that a withdrawal is being used for the designated beneficiary's qualified higher education expenses. Some plans require that the expenses be paid directly by the plan to the educational institution. Others will prepay or reimburse the beneficiary for qualifying expenses paid out of pocket (as long as a receipt is provided). Your plan administrator can tell you what procedures you must follow when requesting a distribution.

Remember, unless you can prove that the withdrawal is used for qualified higher education expenses, federal (and probably state) income taxes must be paid, and possibly a 10 percent federal income tax penalty may apply.



Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011