Joey Romano/Edward Jones
You may already be somewhat familiar with the 529 plan, a popular education savings account that offers federally tax-free withdrawals if the money is used for qualified expenses. But you may not be aware of some newer eligible expenses for this plan.
First of all, in the wake of the COVID-19 pandemic, more schools are offering online classes. You can use a 529 plan to help pay for these costs, just as you would for in-person learning.
Also, a 529 plan can now be used to pay for K-12 expenses, which may interest you if you want to send your children to a private school. Plus, 529 plans can pay for registered apprenticeship program expenses, frequently offered through community colleges.
Furthermore, you can use a 529 plan to repay qualified student loans, within approved lifetime limits.
Check with your tax advisor before taking any withdrawals from a 529 plan. Withdrawals used for reasons other than qualified expenses may be subject to federal and state taxes as well as a 10% penalty. But in any case, it’s useful to know the different ways you can put a 529 plan to work.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones.