Q. If my child received a full scholarship for college, can I get my 529 Plan savings out without penalty?
A. Yes, you can!
When you tap a 529 plan, each withdrawal is a combination of contributions (always tax-free and penalty-free) and earnings (taxed and usually with a 10% penalty if not used for eligible education expenses).
However, as a scholarship reduces your out of pocket college costs, you can withdraw up to the amount of the scholarship from your 529 account without penalty on the earning portion of the withdrawal.
A. Yes, you can!
When you tap a 529 plan, each withdrawal is a combination of contributions (always tax-free and penalty-free) and earnings (taxed and usually with a 10% penalty if not used for eligible education expenses).
However, as a scholarship reduces your out of pocket college costs, you can withdraw up to the amount of the scholarship from your 529 account without penalty on the earning portion of the withdrawal.
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