Section 529 college savings plans have been around long enough that withdrawals are now commonplace. You may be ready to take one.
The big advantage of 529 plans is that qualified withdrawals are always federal-income-tax-free—and usually state-income-tax-free too.
What you may not know is that not all 529 withdrawals are tax-free qualified withdrawals, even in years when you have heavy college costs.
This article explains what we think are the six most important things to know about 529 withdrawals. Here goes.
Point No. 1: You Usually Have Several Payment Options
Say you are the 529 account owner or plan participant. Plans commonly use both terms to describe the person who established and controls the account. In this article, we will use account owner.
As the account owner, you can generally have a withdrawal check cut in your own name or have an electronic deposit made into your own account.
Alternatively, you can have a withdrawal issued in the name of the account beneficiary (the college student for whom you set up the 529 account, usually a child or grandchild) or issued directly to the educational ... Log in to view full article.
