retire2020
Recycles dryer sheets
- Joined
- Sep 22, 2012
- Messages
- 459
My daughter is in Medical School and I have about 250K(80K my contribution and 170K in gain) in 529 plan. I am the owner of 529 and she is the beneficiary. By filling out the FAFSA she automatically qualifies and receives 40.5K of un-subsidized Stafford loan. Her yearly expense would be about 60K(45K Tuition and 15K room and board). I claim my daughter as dependent on my tax returns. Can I do following?
1) Take the loan which is 40.5K
2) But withdraw 60K from 529 plan...full qualified expense
3) I will receive 1098-T from her college stating 60K was paid
Basically what I am trying to do is withdraw full expense from 529 but also use stafford loan to pay for part of the same expenses. I'll save that extra withdrawal of 40.5K from 529 for future use. Is it allowed and within rules? Does IRS care or they only look at 1098-T that expense was indeed paid?
This way if daughter in future gets a job offer where employer pays for student loan(have read few on reddit medical forum where employer offered to pay 40K/year for five years - total 200K student loan paid as part of the overall offer), she'll not miss that chance of not having student loan. If she doesnt get the similar deal then I'll help her pay student loan from the money saved from 529 withdrawal above.
I posted the same question at bogleheads but did not receive any firm answer so posting here as well.
I need to be absolutely sure of the law and what I am planning to do is legal otherwise 10% penalty and taxes on the earning. Any idea?
1) Take the loan which is 40.5K
2) But withdraw 60K from 529 plan...full qualified expense
3) I will receive 1098-T from her college stating 60K was paid
Basically what I am trying to do is withdraw full expense from 529 but also use stafford loan to pay for part of the same expenses. I'll save that extra withdrawal of 40.5K from 529 for future use. Is it allowed and within rules? Does IRS care or they only look at 1098-T that expense was indeed paid?
This way if daughter in future gets a job offer where employer pays for student loan(have read few on reddit medical forum where employer offered to pay 40K/year for five years - total 200K student loan paid as part of the overall offer), she'll not miss that chance of not having student loan. If she doesnt get the similar deal then I'll help her pay student loan from the money saved from 529 withdrawal above.
I posted the same question at bogleheads but did not receive any firm answer so posting here as well.
I need to be absolutely sure of the law and what I am planning to do is legal otherwise 10% penalty and taxes on the earning. Any idea?