Qualified spending is the key to 529 plans
Are you a parent thinking about how to pay for your children’s college? Should you consider a 529 plan? Named after Section 529 of the Internal Revenue Code, a 529 plan offers the opportunity to save for the university in a tax-efficient manner. But you have to be careful, because the tax benefits disappear if the savings are not used to pay for eligible education expenses (EQE).
The best resource is IRS publication 970 (tinyurl.com/u5f34pdc), which gives detailed details of qualified tuition programs, aka 529 plans. It describes EQAs as “expenses required for the designated beneficiary’s enrollment or attendance at an eligible educational institution”. A subset of QEE, Qualified Higher Education Expenditure (QHEE), is “related to enrollment or attendance at a qualifying post-secondary school.”