My child is the beneficiary of a 529 plan. Can we use the 529 funds for her private elementary or secondary school?
Answer
No, 529 funds can't be used to pay for an elementary or secondary school education. They can be used only for higher education expenses (college, graduate, or vocational school expenses). But have you considered a Coverdell education savings account (formerly known as an education IRA)? You may be able to contribute as much as $2,000 per year to a Coverdell ESA. You can withdraw money tax free from a Coverdell ESA to pay for qualifying educational expenses at elementary and secondary schools. Qualified expenses include the cost of tuition, room and board, uniforms, transportation, computer equipment, and more. Withdrawals for nonqualified expenses will generally be subject to income tax and an additional 10 percent federal penalty tax on earnings.
And you don't have to choose between a 529 plan and a Coverdell ESA. You can contribute money to both in the same year without penalty.
GE 37789 (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.
AXA Equitable does not provide legal or tax advice.
Information provided has been prepared from sources and data we believe to be accurate, but we make no representation as to its accuracy or completeness. Data and information is provided for informational purposes only, and is not intended for solicitation or trading purposes. Forefield, Inc is not an affiliate of AXA Equitable. Please consult your tax and legal advisors regarding your individual situation. Neither AXA Equitable nor any of the data provided by AXA Equitable or its content providers, such as Forefield, shall be liable for any errors or delays in the content, or for the actions taken in reliance therein. By accessing the AXA Equitable website, a user agrees to abide by the terms and conditions of the site including not redistributing the information found therein.
© Copyright 2007 Forefield Inc. All rights reserved.
