529 plan FAQs: Paying for school

Money withdrawn from the 529 plan account can be used for a wide range of qualified higher education expenses, such as room and board, tuition, books, and computer equipment. Refer to your enrollment kit for a full list of expenses covered by your state's plan. You should receive the kit after opening the account—or it can be found on Fidelity.com on this page: Open and maintain a 529 plan account

Money from a 529 account must be used for qualified education expenses to avoid taxes and penalties. But in addition to college expenses, you can also spend up to $10,000 per year on tuition expenses for elementary, middle, and high school—private, public, or religious. It's important to know that the $10,000 annual limit is per beneficiary, not per account—the money can come from multiple 529 accounts. Any amount over that $10,000 limit will be subject to income tax and a 10% federal penalty tax.

Find out more by reading Viewpoints: 529s for K–12 tuitions: Does it work for you?

Additionally, the SECURE Act of 2019 expands the definition of a tax-free or qualified distribution from a 529 savings plan. 529 Participants may take up to $10,000 in distributions tax free per beneficiary for tuition expenses incurred with the enrollment or attendance of the designated beneficiary at a public, private, religious elementary or secondary school, certain apprenticeship costs, or student loan repayments per taxable year. The money may come from multiple 529 accounts; however, the $10,000 amount will be aggregated on a per beneficiary basis. Any distributions in excess of $10,000 per beneficiary may be subject to income taxes and a federal penalty tax. Some states do not conform with federal tax law. Please check with your home state to determine if it recognizes the expanded 529 benefits afforded under federal tax law, including distributions for elementary and secondary education expenses, apprenticeship programs, and student loan repayments. You may want to consult with a tax professional before investing or making distributions.

When you have qualified expenses, you can take withdrawals federal income tax- and penalty-free. To avoid a tax bill, your qualified withdrawals must be in the same calendar year as the expense. For instance, if you buy textbooks in September 2023, and plan to take a withdrawal from the account to reimburse yourself—the withdrawal must be done in 2023.

You can withdraw money for nonqualified expenses too at any time, but you will owe federal income tax and the 10% penalty, in addition to any state or local income taxes and investment taxes on any earnings withdrawn.

For more information, read: Making withdrawals and contributions.

Due to recent changes to the Free Application for Federal Student Aid (FAFSA) form, a 529 account owned by a grandparent (or other non-parent) is not reportable on the FAFSA financial aid application, which means it no longer has an adverse effect on the grandchild’s financial aid eligibility. Please note that the CSS Profile, which is required by some colleges and universities, asks how much the student expects to receive from others. Please consult with a financial or tax professional regarding your specific circumstances prior to making an investment.