09 Apr Using 529 funds for pre-college program
Q. My son was accepted into a three-week summer program at a college. It’s a pre-college program and he’ll get four credits for the class. Can we use 529 plan money to pay the tuition even though he’s still in high school?
A. Sounds like a very exciting opportunity for your son.
Using the 529 Plan sounds like a great option, but it will depend on where he’s taking the class and exactly what you’re paying for.
A 529 Plan is what’s known as a Qualified Tuition Program, or QTP, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown. He said a QTP allows you to either prepay or contribute to an account established for paying a student’s qualified education expenses at an eligible educational institution.
“For purposes of a QTP, this is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education,” Kiely said. “It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions.”
He said before you withdraw funds from a 529 Plan, ask the institution if the program your son will attend if the program qualifies.
Even if the school qualifies, your son may not.
That’s because the eligible expenses cover tuition and fees, expenses for special needs services and room and board for students who are enrolled at least half time, said Joseph Matheson, a certified public accountant with Matheson & Assoc. in Whippany.
You said your son will be taking a class for which he’ll get four credits, and unfortunately, that doesn’t make it sound like he’ll be enrolled half time.
So perhaps you can ask the school to split up for you how much of the payment is for tuition and fees and how much is for room and board.
Or, if you also have an UTMA account for your son, you can explore funding the costs from that account.
Good luck to your son in this exciting endeavor — and to you in finding the way to pay for it all!
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This story was first posted in April 2015.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.