<p>Okay, so I never opened one, until now. I just opened one for a modest $250 just to get things started</p>
<p>My state (PA) lets me write up to 12K off my taxable income (we have a flat 3% income tax).</p>
<p>My contributions to my son's expenses will be 10-15K depending on which housing he gets.</p>
<p>When I get the bill from the college later this summer, can I then move the amount I need to pay into the 529 and then pay the college. I realize that I'm not getting much/any savings on the interest (since the money won't be in the 529 very long). But if I do nothing more than save the 3% on the state income taxes, it's still worth it, right?</p>
<p>Yep, if only for the state tax break alone.</p>
<p>Wow, I should move to PA. Here we can only write off $2000, and our state income tax is 9%.</p>
<p>But yes, take the write off!</p>
<p>How does it work when you take money out for a 'qualified expense'?</p>
<p>I think I can pay the school from my bank account and then at some point (during the same calendar year) move the money from the 529 back to my bank account? is that right?</p>
<p>Also, how do 'they' know that you have used that money for a qualified expense vs a non qualified expense (I'm not sure what those are, travel)? I want to make sure I have the correct documentation in case I'm asked to provide it.</p>
<p>I believe with ours, you can request funds be distributed directly to the school, or to you. It would certainly be simpler, from a paper trail standpoint, to have funds disbursed to the school. That way if you're ever audited, you can absolutely prove that the funds were used for school-related expenses.</p>
<p>Haven't tapped into ours yet - we're still just contributing.</p>
<p>I second the 'send $$$ direct to school" method.
It leaves a much cleaner paper trail just in case you're audited.</p>
<p>First time I had 529 partial withdrawal sent to us, then paid school from my checking account for qualified expenses. Have school bills to substantiate.
BUT the 529 plan sends me a year end statement listing the withdrawal as 'non-qualified'. Didn't make me too happy. Customer service rep explained that 'that's what we do' when $$$ sent to owner instead of school.<br>
So, now I request direct to school payment and the statement comes back as a 'qualified' withdrawal.
Maybe diffeerent 529s handle situation differently but I just prefer to have a nice clear cut hunk of paper to back up my returns.</p>
<p>thanks for the feedback. I'll stay on the safe side and have the money sent directly to school.</p>
<p>taxes are going to be bothersome enough for 2007 with the whole college expenses issue. Don't need the IRS breathing down my neck.</p>