Speak with an owner of the firm (888) 988-6621

Investing in a 529 plan can be an effective strategy to save for college. 

There are, however, some overlooked nuances related to 529 account distributions. And oftentimes, those nuances are not addressed (or even discovered) until after the distribution has occurred and the client is left with an unexpected tax liability.

To make the discussion with clients easier, we have created the “Is The Distribution From My 529 Plan Taxable?” flowchart. 

It covers some of the most common issues for investors who are planning to take a distribution from a 529 account and considers:

  • What kinds of expenses are qualified
  • The tax impact if the expense is nonqualified
  • Considerations if the beneficiary is disabled
  • The formula for calculating Adjusted Qualified Education Expense (AQEE)
  • The impact of claiming American Opportunity Tax Credit and Lifetime Learning Tax Credit
  • The formula for calculating the tax associated with any distribution (if applicable)