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Today a supplement to the 529 'Fact Kit' was announced for the Fidelity "UNIQUE College Investing Plan".
A notable addition was in the "Purpose of Expense" section. Before, they had sections for:
It's that last one that caught me off-guard because, as far as I recall, student loans "didn't count". In other words, paying student loans didn't allow you to pull from your 529 account penalty free (unlike QHEE).
Here are some excerpts:
Did anyone know that this rule change happened 'a long time ago'?
A notable addition was in the "Purpose of Expense" section. Before, they had sections for:
- Higher Education Expenses
- Elementary and Secondary Education Expenses
- Apprenticeships
- Student Loan Repayment
It's that last one that caught me off-guard because, as far as I recall, student loans "didn't count". In other words, paying student loans didn't allow you to pull from your 529 account penalty free (unlike QHEE).
Here are some excerpts:
And from the FAQ:Student Loan Repayment - amounts paid as principal or interest on any qualified education loan (as defined in section 221(d) of the Code) of
a 529 plan designated beneficiary or a sibling of the designated beneficiary. The amount treated as a qualified expense is subject to a lifetime limit of $10,000 per individual. This provision is effective for such distributions
made after December 31, 2018. Any federal income tax deduction otherwise available for interest on any qualified education loan will be reduced by the interest component of any qualified withdrawal used to repay a qualified education loan of the applicable taxpayer in the applicable tax year
I'm just reporting what I saw just now. I have no idea where or when this tax law change happened. I just wonder how this got past me! The change must have been in some Federal legislation that got passed, or I suppose a court case could have had this as a consequence.want to use the money to repay student loans? You may pay amounts used as principal or interest on any qualified education loan of a 529 plan designated beneficiary or a sibling of the designated beneficiary up to a $10,000 lifetime limit per individual.
Did anyone know that this rule change happened 'a long time ago'?
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