CollegeAmerica® 529 tax FAQ

Generally, qualified education expenses are expenses incurred by a beneficiary while attending an educational institution. For a list of qualified expenses, as well as the tax implications of taking a nonqualified distribution, visit 529 qualified education expenses.

Generally, if distributions are used for purposes other than qualified education expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax.

States take different approaches to the income tax treatment of distributions. For example, distributions for K-12 expenses may not be exempt from state tax in certain states. Tax deductions may be disallowed in the event of non-qualified distributions.

The reporting SSN is based on who the money is payable to:

• Distributions payable to the account owner or a third party are reported under the account owner’s SSN
• Distributions payable to the beneficiary or the school are reported under the beneficiary’s SSN

No, the account owner can use a CollegeAmerica account to pay for qualified education expenses at an eligible educational institution in any state.

Yes, the account owner must use the funds in the account or designate a new beneficiary within 30 years after the beneficiary graduates from high school or within 30 years after opening the account, whichever comes later.

There is no minimum level of study; however, if the student is enrolled on a less-than-half-time basis, distributions for room and board will not be considered qualified.

Review Publication 970, Tax Benefits for Education or consult with a tax advisor.