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Financial Planning / Paying For College

URL:  https://boards.fool.com/one-other-benefit-of-a-529-is-that-withdrawals-13046598.aspx

Subject:  Re: 529 vs. LTBH Date:  8/1/2000  3:31 PM
Author:  EdmundRoss Number:  2701 of 8571

One other benefit of a 529 is that withdrawals used for approved college expenses are tax exempt. That being the case the only tax paid is on long term profit not used for school.

This is not the case. You will always pay taxes on your earnings when you withdraw the money, although it will be assessed at the child's tax rate. If the money is not used for education, then you will have to pay a penalty (usually about 10% of earnings) as well.

-- Edmund Ross
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