Our D19 will be headed to an in-state public college in August. We have set up a prepaid 529 and an Invest 529. The Prepaid covers tuition and fees. The Invest 529 will cover R&B, new computer, books, and other supplies.
Question: When should I start to request distributions for computers and supplies from the Invest 529? She wants a new computer in the next two weeks (her current one is 6 years old).
Thanks.
Make sure to take the 529 distribution in the same tax year in which the expenses they are meant to reimburse/pay for are paid. In late December, watch out for a distribution request to the 529 plan administrator being satisfied in January – that will mess up the timing requirements. Other than that, it’s whatever makes sense for you based on your planning and finances, and your investment objectives.
You just need to withdraw funds from a 529 in the same calendar year in which the expense is incurred.
So you can withdraw it now, as late as December, or could have taken it out in January.
Typically, I transfer to my checking account a week before I need to make a payment for tuition/R&B. For books and other items that go on a credit card, I wait for the card statement, total it up, and withdraw in time to make to payment, 25 days later (unless the charge was in December)
Be careful about this for 2nd semester tuition/expenses. It’s easy to accidentally withdraw in late December and pay in early January, or vice versa. That becomes a real tax problem.
thank you @BelknapPoint and @RichInPitt.
I will make sure I watch when to request for R&B for and then pay for the 2nd semester.