I know I can borrow against my 401(k), but can I borrow against the value of my 529 account?
Answer
No. Section 529 plans do not allow loans against an account's assets. You can, however, make withdrawals from the plan to pay for qualified educational expenses. Keep in mind, though, that nonqualified withdrawals (i.e., funds not used for qualified higher education expenses) are subject to a federal penalty tax of 10 percent on the earnings portion of the withdrawal (a state penalty may apply as well). You may also owe federal, and in some cases state, income taxes on the earnings portion of a nonqualified withdrawal.
GE 38107 (03/07)
If you are investing in a 529 plan outside of your state of residence, you may lose available state tax benefits. Make sure you understand your state tax laws to get the most from your plan.
529 plans are subject to enrollment, maintenance, administration/management fees and expenses. 529 plans are subject to fluctuation in value and market rise, including loss of principal.
Investors should consider the investment objectives, risks, charges, and expenses of 529 plans carefully before purchasing. More information about 529 plans can be found in the issuer's official statement. Please read the official statement carefully before investing.
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