ESA & 529 Plans - Academic Scholarship Competitions as Qualified Expenses?

[6lambs]

<p>Our son is in the running for 2-3 school specific leadership scholarships that if invited will involve plane flights, car rental, lodging and food expenses. Does anyone have any insight as to whether or not Coverdell ESA &/or 529 savings plan assets can be used to pay for any of the above costs as qualified expenses under those plans?</p>

[vballmom]

<p>I can’t tell you about Coverdell, but these would not be qualified expenses for payment by a 529 distribution. Valid 529 expenses are only those having to do with enrollment and attendance at a college: tuition, room & board, books, transportation, and expenses of a special needs beneficiary. I’m guessing that Coverdells have the same restrictions.</p>

[swimcatsmom]

<p>No. Theses expenses would not qualify for coverdall or 529 account withdrawals. Travel is never an allowed expense for post secondary students for either coverdell or 529 (but is for elementary or secondary students for coverdell).</p>

<p>For coverdell an expense must be required for enrollment (such as tuition and fees, books) or the student must be enrolled at least half time for other expenses (room and board, not travel).

Qualified Higher Education Expenses
These are expenses related to enrollment or attendance at an eligible postsecondary school. As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time.

1. The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school.
   a. Tuition and fees.
   b. Books, supplies, and equipment.
2. Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school.
3. Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below).
   The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts.
   a. The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
   b. The actual amount charged if the student is residing in housing owned or operated by the school.

</p>

<p>The rules for 529 accounts are similar except that some computer expenses are currently allowed (which they are in coverdall for secondary school students but not post secondary, weird).</p>

<p>The IRS publication for education tax benefits is IRS970.</p>