When you withdraw money from a 529 plan like Learning Quest for qualified, college-related expenses, you pay no federal or state income taxes. Qualified withdrawals may be used for any qualified educational institution, anywhere in the United States. Qualified institutions include accredited public or private colleges or universities, graduate schools, community colleges, and vocational and technical schools.
Qualified expenses include:
- Mandatory fees
- Required books, supplies and equipment
- Certain room and board expenses
NOTE: It is the responsibility of the account owner and/or beneficiary to determine that the withdrawal meets the requirements to be considered a qualified withdrawal. When you make a withdrawal, the following January, you or the beneficiary will receive
IRS Form 1099-Q, which will report information about the withdrawal to the recipient and the IRS.
A qualified withdrawal may be made payable to the account owner, beneficiary or an eligible educational institution. Learning Quest may also make qualified withdrawals payable to certain third parties such as a sorority, fraternity and certain paying agents designated by an educational institution.
In addition, Learning Quest lets you make systematic withdrawals from your account if you have ongoing payments to make for a qualified education expense.
For additional information, click on the appropriate link below:
A non-qualified withdrawal consists of proceeds that you remove from the account that do not meet the requirements of a qualified withdrawal. The earnings portion of the non-qualified withdrawal is subject to federal and state income taxes and will be subject to a 10% federal penalty tax. Kansas taxpayers also will owe Kansas state taxes on the contribution.
The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors.
IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.