<p>My in-laws generously set up a 529 plan for my son. He got a full-ride scholarship so we are considering letting that money earn a bit more since it was hit hard by the economic downturn. </p>
<p>However, I have some questions for those who have used the 529. I will also check with the company that administers the fund.</p>
<li> Can he use the money for research and study abroad, summer seminar opportunities?</li>
<li> Is the money disbursed directly to the university? How does the fund determine money was used for education expenses?</li>
<li> Does the money have to be released by his grandparents, because I believe they retain control??</li>
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<p>Thanks for any insight!</p>
<p>Jamiecakes, you definitely need to contact the 529 because I think they are different. For our state plans I believe I can have the funds disbursed directly to me but I just have them go to the university. At the end of the year the 529 sends you a tax form which reports the withdrawal. You will then report this on your taxes and if it is in excess of the cost of tuition plus mandatory fees the remainder will be taxable. </p>
<p>Whoever has control of the account has to do the releasing but I believe that it’s possible to transfer ownership of an account to someone who is over 18 (might be state or 529 specific).</p>
<p>My mom opened a 529 for my son with him as beneficiary. The way we work it is that my mother fills out a form each semester with the amount requested to be disbursed. She can specify that the check be sent to her or directly to the university. We always request that it be sent directly to the university – just seems easier and faster. </p>
<p>The fund doesn’t make any determination as to whether the money was used for qualified educational expenses. We’re expected to keep records of our expenditures that would be used in case of an audit. There’s a box on the Withdrawal Request Form that my mother checks stating that the withdrawal is either Qualified, Non-Qualified or withdrawn due to the death, disability or scholarship awarded to the beneficiary. </p>
<p>I’m pretty sure that you could use the funds for summer seminar opportunities and study abroad, since qualified expenses include tuition and fees, as well as room and board. You’d want to check the IRS Publication 970 and maybe get the advice of a tax advisor.</p>