Use of 529 Plan Funds

According to the IRS Publication 970, page 56, the use of 529 plans is limited to educational institutions that are eligible to participate in a student aid program administered by the U.S. Department of Education. Eligible schools may be found on the Department of Education website.

If a program or school is not on the list, other documentation may be submitted to support the use of 529 plan funds to pay tuition and other qualified expenses. These entities are not required, and not eligible, to report tuition on IRS Form 1098-T.

We suggest the following documentation in place of the 1098-T, which has been used to successfully avoid paying a tax penalty on 529 plan withdrawals.  Consulting a professional tax advisor for clarification in individual circumstances is strongly encouraged.