I have a 529 College savings plan, and it has a fair amount of money in it (not saying exact amount for privacy), and I know that you can only withdraw from it for college-related expenses, but I have a question that I’m not really sure about: If I wanted to take a class at a community college over the summer, would I be allowed to withdraw from the account to cover the cost? It would be college-related, but I’m kind of unsure because it would be as a non-matriculated student. Are you only allowed to use those funds if you’re a matriculated student?
I’m looking at publication 970 page 51. It looks like you could use the 529 for tuition and required fees and books.
However, the other allowable 529 expenses such as living expenses and a computer are limited to students who are at least half time in a course of study (usually that means seeking a degree or certificate).
First of all, a withdrawal from a 529 account is not limited to college expenses. Beginning this year (2018), a 529 withdrawal can be used tax-free and penalty-free for tuition at any K-12 school. And, if you’re willing to pay income tax on the earnings, and likely the 10% additional tax as well, you can generally take money from a 529 account and use it for whatever you want.
You don’t have to be a matriculated student at an eligible educational institution in order to use 529 money for qualified expenses and not pay tax on the earnings portion of the distribution.