College Savings Plan
College Savings Plan

Trying to determine what college expenses qualify for 529 Plan and Coverdell Education Savings Account (ESA) withdrawals? Here is a listing for quick, easy reference. Make sure and keep any receipts for these qualified expenses to prove the use of the distribution, in case of a tax audit.

529 Plans

Qualified higher education expenses: generally, tuition, fees, books, supplies, and equipment required for attendance qualify. Computers, software, peripheral equipment, and Internet access also qualify if they are to be used primarily by the beneficiary while the beneficiary is enrolled at an eligible education institution. Reasonable cost of room and board are also included if the student is attending school at least half time.

Coverdell ESA

Qualified higher education expenses include tuition, fees, books, and supplies and equipment needed for attendance. Room and board is included for students attending half time or greater.

Common expenses during college years that will not qualify include:

Furnishings, appliances etc. for the dorm. Insurance, sports or club activity fees, and many other types of fees that may be charged to your student but are not required as a condition of enrollment do not qualify. Transportation costs do not fall under qualified expenses. Room and board costs in excess of the amount the school includes in its “cost of attendance” figures for federal financial aid purposes. If your student is living off campus, ask the financial aid department for the room and board allowance for students living off campus.

*Before buying a 529 plan, you should inquire about the particular plan and its fees and expenses. You should also consider that certain states offer tax benefits and fee savings to in-state residents. Whether a state tax deduction and/or application fee savings are available depends on your state of residence. For tax advice, consult your tax professional.  Non-qualifying distribution earnings are taxable and subject to a 10% tax penalty.

Click below to read other articles from the Christian Financial Advisors® August 2016 Newsletter

Are you using our Christian Financial Advisors® System? As a client, this is your personal Christian Financial Advisors® account consolidation system…and more!

If you have been an investor for at least 10 years and you have a buy and hold investment portfolio, now may be the time to get tactical.

Take a closer look at these highschool graduation photos to see if you can guess which Christian Financial Advisors® staff they belong to!

Advice for the recent grad in your life on making their dorm space a home away from home when they go off to college!