<p>I would like to make the tuition deposit for my S for the school he will be starting at next September (housing priority is set by date of deposit).</p>
<p>However, my state's 529 Plan said they cannot reimburse me without a tuition bill (which, of course, I wouldn't have until next summer).</p>
<p>Since I want to make the tuition deposit and the 529 withdrawal in the same calendar year, it sounds like I can't make the tuition deposit until January 1.</p>
<p>The 529 Plan total me that I could make the tuition deposit right now and then get reimbursed next summer, but that does not sound like good advice (the date of tuition payment and reimbursement would be in different calendar years).</p>
<p>Thoughts?</p>
<p>I’m surprised that your 529 plan cannot reimburse you without a tuition bill. Are you saying that they require that you provide written proof to them, from the school or another source, that you have incurred a qualifying education expense? If so, that’s a bunch of bull. Just tell them that you want to make a withdrawal. It shouldn’t be up to them to determine whether or not it’s for QEE; that’s between you and the IRS. As long as you can document later that the 529 distribution was used for QEE, you should be fine. And you are smart about wanting to make sure that the 529 distribution and the payment for the QEE that the distribution was made for happen in the same calendar year.</p>
<p>Which 529 plan is this?</p>
<p>I thought housing priority was usually set by payment of a separate housing deposit which is generally refundable. Double check that. Also, I’ve never heard of a 529 plan requiring proof of expenses before distributing money, that doesn’t sound right. Do you have to send them book and supply receipts too? It’s up to the taxpayer to coordinate that there are enough expenses and in the correct tax year for the distribution earnings to be non-taxable.</p>
<p>On the other hand, the deposits are generally actually applied to the bills in August or September and I do believe you could take a distribution for that amount next year even if you send in the check now. Under some circumstances at some schools tuition deposits can be refundable so the amount hasn’t actually been used for QEE until applied to a bill.</p>
<p>But really, how much is the deposit? Is it enough that you should worry about getting a distribution for it? Do you have so much in the 529 that you are concerned you won’t have enough expenses in the next 4 years to empty it?</p>
<p>Two other thoughts:</p>
<ol>
<li><p>Is this a prepaid plan? I’m not as familiar with the rules for prepaid plans.</p></li>
<li><p>If it’s not a prepaid plan and the plan administrator won’t budge on the tuition bill/documentation requirement, tell them that you want to take an unqualified distribution, and then use the money to pay the tuition deposit, which is a QEE. It doesn’t matter what the plan administrator might report to the IRS, what counts is what you report and can back up with documentation.</p></li>
</ol>