<p>Son #1 will be living with me when he starts college in the fall. Can I withdraw room and board expenses up to the amount the college has stated on his financial aid summary? I'd really like to reduce the amount in his 529 sooner rather than later because I will have to claim it as an asset when filling out the FAFSA for Sons #1 & #2 in January.</p>
<p>I would ask this question directly to Iowa College Savings, but it has been my experience that their responses are always a canned answer that tells you nothing and covers their behinds in the case of an audit.</p>
<p>Just try to withdraw the money during the same calendar year as when the bills are paid. In other words, if you withdraw money in December 2013 for the Spring 2014 semester, send the money to the college in December 2013. </p>
<p>Many people withdraw money in December and then pay bills in January, which could theoretically cause tax difficulties.</p>
<p>I don’t know for sure but most of the publications I read say that there is usually an allowable amount set by the school for room & board for students who stay at home. This should mean that the amount allowed is different from if you live in school campus housing. It probably depends on which figure is reported in the financial aid summary, you might want to check with the school first.</p>
<p>Check with the college financial aid office for their estimated cost of attendance of a commuting student, then use this number as basis for your 529 withdrawal.</p>
<p>Actual expense, up to the COA amount for room & board. But you have to use the “student living at home” room & board amount. At the University of Iowa, for instance, that’s $900 / semester.</p>
<p>These rules apply to the penalty assessed if funds are not used for qualified expenses. Depending on your situation, a portion of the distribution might still be taxable, even if not penalty is owed.</p>
<p>For more detail, see chapter 8 of IRS Publication 970. Though sometimes confusion, it is all spelled out there.</p>
<p>Now if only I could withdraw for transportation (which I know I can’t) since that truly is part of the expense of living at home. That expense alone the school estimates to be over $2500.</p>
<p>I believe you could count student loans as going towards transportation costs because they are part of your cost of attendance. That may free up your 529 dollars to be counted for tuition, books, and allowed room and board. </p>
<p>Loan funds can also be counted as the same dollars that are counted for a Federal Opportunity Tax Credit.</p>