Have a question regarding 529 plans
My sister had one for her daughter at Blackrock. She transferred it over to Schwab last year. Last week she had remaining money withdrawn and Schwab sent her a check directly to her. My sister said that when the account was with Blackrock, they would send check directly to her as well , but then then send a form for her to fill out that would "prove" the money ended up going for college expenses. When she asked Schwab for that form they said there is no form and Schwab will just send out a 1099 Q at end of year , but there is no other form.
My question is:
How will the IRS know that the money, in fact, went to pay for education expenses? If its not used for that I understand there is a 10% penalty
My sister could easily just spend the money on groceries no?
Also confused as to why Blackrock did provide a form and Schwab is saying they don't issue any form.
anyone have info or experience with this?
thanks
My sister had one for her daughter at Blackrock. She transferred it over to Schwab last year. Last week she had remaining money withdrawn and Schwab sent her a check directly to her. My sister said that when the account was with Blackrock, they would send check directly to her as well , but then then send a form for her to fill out that would "prove" the money ended up going for college expenses. When she asked Schwab for that form they said there is no form and Schwab will just send out a 1099 Q at end of year , but there is no other form.
My question is:
How will the IRS know that the money, in fact, went to pay for education expenses? If its not used for that I understand there is a 10% penalty
My sister could easily just spend the money on groceries no?
Also confused as to why Blackrock did provide a form and Schwab is saying they don't issue any form.
anyone have info or experience with this?
thanks