Can I use a 529 plan for post-graduate school?


Q. Everything I’ve read about the changes 529 accounts says that the account can now be used for K-12 private education tuition only. Can the 529 account pay for the tuition for a post-graduate year at a private secondary school?
— Mom

A. Great question.

The program you are referring to is called a “gap year” program.

If the program you’re considering is at an eligible institution and the expenses are qualified as per IRS rules, then you should be able to use funds in your 529 account, said Deva Panambur, a certified financial planner with Sarsi, LLC in West New York.

Panambur cited the IRS, which says 529 plans can be used for “paying a student’s qualified education expenses at a postsecondary institution and for distributions made after 2017, qualified education expenses may include no more than $10,000 paid for elementary or secondary school tuition incurred after 2017.”

Further, Panambur said, the IRS says”: “An eligible post-secondary educational institution is a school offering higher education beyond high school. It is any college, university, trade school, or other post-secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education. This includes most accredited public, nonprofit and privately-owned–for-profit post secondary institutions.”

To check if the school is an eligible educational institution see if your school is on the U.S. Federal Student Aid Code List, click here.

Just in case the list isn’t as updated as we hope, you can also ask the school if it is eligible.

Email your questions to moc.p1555956572leHye1555956572noMJN1555956572@ksA1555956572.