Is there a penalty for using 529 funds for unqualified expenses?

by Christopher C. Humes, CPA | Jun 24, 2016
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Is there a penalty for using 529 funds for unqualified expenses, like travel?

If the 529 plan funds are used for unqualified expenses, there is a 10 percent federal penalty tax as well as regular federal income tax on the earnings. For Pennsylvania, the total amount of the distribution that was claimed as a deduction in a previous year is taxable.

Answered by: Christopher C. Humes, CPA, is with Baker Tilly Virchow Krause LLP in Wormleysburg, Pa.

 
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