Having a clear plan in place can make the process smooth and stress-free. Here are five key steps to keep in mind when preparing for withdrawals from your my529 account:
1. Review your funding needs and withdrawal plan
Take a close look at your projected expenses for the semester and compare them to your my529 balance. Withdrawing only what you need can help your savings last longer.
2. Know what qualifies as a qualified education expense
Before making any withdrawals, be sure you understand what expenses qualify. Tuition, fees, books, and certain room-and-board costs may be covered. Others may not. Refer to the official list of qualified education expenses in the Program Description for details.
3. Decide how and when to withdraw
The withdrawal method you choose will affect how quickly you receive the funds:
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Check by mail: Up to two weeks
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Electronic transfer to a bank account: 2–3 business days
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Direct to school payment: Available through my529’s electronic payment service (with a $3.50 service fee)
If you’re unsure of the best method or timing, we’re happy to help you navigate the process and point you toward the right my529 resources.
4. Keep good records
It’s important to track all qualified expenses in case the IRS requests documentation. Save receipts, invoices, and statements that show how funds were used.
5. Understand the tax implications
Withdrawals used for qualified education expenses are tax-free. But if funds are used for nonqualified expenses, earnings may be subject to federal and state income tax — plus a 10% penalty. Certain exceptions apply, so be sure to review your situation before making a withdrawal.
Preparing for withdrawals doesn’t have to be overwhelming. With a little planning, you can make the process simple and ensure that your student has the resources they need for the school year.
At Beaird Harris, we’re here to guide you through the details and connect you with my529 resources — so you feel confident in your decisions.
Enjoy the rest of your summer, and best wishes for a successful school year ahead!
Ginnie Baker
