SecondCor521
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Actually, I think the lawmakers intended for people to basically reimburse themselves for money already spent. From what I understand you are only supposed to withdraw money for expenses already incurred in that calendar year. So for next spring 2021, I'd wait until at least January 2021, unless you can somehow pay the bill by the end of December. No point in doing something that you know won't hold up in an audit. I've been totaling up the money spent, including on a laptop and books, and making transfers from the 529 for the actual amounts spent, because what if the expected outlay changes? This way is a lot simpler.
And it's not just the tax, there's a 10% penalty, too.
I do it the way you describe, for similar reasons. Although I rely on the IRS, not Kiplinger, for tax rules.
The issue with taking out costs for "next semester" in significant advance of them actually being incurred, is that the outlay might change *to the lesser*, so if you remove $10K from a 529 and the expense is only $8K, then you have $2K of non-qualified withdrawals. Not the biggest deal in the world, but then you do have more hassle and math to deal with.
With my kids, I don't try to predict any more. I thought I'd have three in college this fall, but one isn't going due to COVID. Another one was going to change meal plans and may also change schools. They can always add or drop credits, which can change the price. And this can happen with as little notice as "next semester".
The IRS does now allow you to recontribute an excess withdrawal back into either 529s or ESAs, or maybe both, but it has to be done within 60 days of the withdrawal.