<p>Are orientation fees eligible 529 expenses? </p>
<p>If the college requires health insurance, is that an eligible expense?</p>
<p>Logic says that anything REQUIRED would certainly be covered. And IMO anything "reasonable" would also be covered. (For example, papers and pens and calculators and travel costs to/from are generally not required, but they certainly are reasonable.) Are the orientation fees "a reasonable requirement for success?" I suppose that would depend on what the fees were for. Library orientation? Probably yes. Hayride around campus? Probably no.</p>
<p>Our orientation fees were required, and clearly listed on the tuition bill, so I am using 529 funds for them. I am not an accountant or tax expert, so am not offering a professional opinion!</p>
<p>Per the IRS pub. 970, Qualified Tuition Plans (529 accounts) qualified expenses are tuition, mandatory fees, books, supplies, and equipment as required for enrollment or attendance, and reasonable room and board. If you're wondering if particular fees at your college meet this criteria you might ask your financial aid office. BTW, I received a letter from the IRS re: the 529 withdrawal I made in 2006. The IRS had calculated the 10% withdrawal penalty, extra taxes on the income, and interest and penalty for underreporting. That got my attention! I sent them a tuition bill as proof that it was spent on our D.'s education and I received a prompt "never mind". So it is important to keep records of legitimate expenses.</p>
<p>Logic has little to do with it - remember we are talking taxes here! the IRS publication is IRS970
<a href="http://www.irs.gov/pub/irs-pdf/p970.pdf%5B/url%5D">http://www.irs.gov/pub/irs-pdf/p970.pdf</a>
page 49</p>
<p>
[quote]
Qualified education expenses. These expenses are the
amounts paid for tuition, fees, books, supplies, and equip-
ment required for enrollment or attendance at an eligible
educational institution (defined in the next column).
They also include the reasonable costs of room and
board for a designated beneficiary who is at least a
half-time student. The cost of room and board qualifies only to the extent that it is not more than the greater of the
following two amounts.
1. The allowance for room and board, as determined by
the eligible educational institution, that was included
in the cost of attendance (for federal financial aid
purposes) for a particular academic period and living
arrangement of the student.
2. The actual amount charged if the student is residing
in housing owned or operated by the eligible educa-
tional institution.
You will need to contact the eligible educational institution
for qualified room and board costs.
[/quote]
</p>
<p>"Logic has little to do with it - remember we are talking taxes here!"</p>
<p>SCM - You're right of course. But I have to at least PRETEND there's some order in the universe, if for no other reason than to preserve what's left of my SANITY!</p>
<p>I think I may have taken out more than our actual expense because of the health insurance. It was part of the tuition statement, and I calculated my withdrawal based on that. I'm just now realizing that the insurance probably isn't allowed. I was thinking that if the orientation fees were allowable, that would help lower the overage. </p>
<p>What else can I do? Can I prepay part of next year's expenses?</p>
<p>Your college's financial aid office may have some answers for you. Or a tax accountant. </p>
<p>2nd semester tuition bills usually come in December, so you may have more to pay this year anyway.</p>
<p>When did you take it out? I know you can roll over money into another 529 if done withing 60 days and not incur tax or penalties. I don't know if putting it back in the same 529 would be treated the same. Seems like it should be - but tax rules don't seem to follow the same logic my brain follows.</p>
<p>And you can use 529 for room and board. Had you already taken that into account?</p>
<p>I am of opinion that Health Insurance is a qualified expense, not optional. Try to attend college without it. If and item shows up on the billing statement, I think its a legit expense. Failure to pay, means no college. Read your contract with the school.</p>
<p>So I take this discussion to mean that we cannot use 529 funds for a highly recommended, but not required, orientation session–correct? Thanks!</p>