You or the beneficiary may receive a refund from the eligible educational institution. You may re-contribute the refund to your 529 account for that beneficiary and avoid any tax. The re-contribution must be made within 60 days of receiving the refund to avoid the taxes and penalties associated with a non-qualified withdrawal.
If the beneficiary attends an eligible educational institution at least half-time, you can still use the 529 account to pay for certain room and board expenses.
You can also change the beneficiary without adverse federal income tax consequences, as long as the new beneficiary is an eligible member of the family of the current beneficiary.
You can always make a non-qualified withdrawal. The earnings portion of a non-qualified withdrawal is subject to federal and any applicable state income taxes as well as an additional 10% federal tax.
Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.