Dear Dr. Don,
I am interested in enrolling in a noncredit certificate program at an accredited university recognized as a qualified institution. I want to use Section 529 plan funds to pay for the program, but I am having difficulty determining whether the litmus test is the institution or the coursework concerning qualified education expenses. Can you clarify this for me?
-- Linda Learner
You don't have to be in a degree program to use 529 money. Continuing education can be funded with 529 plans. Using the money for room and board would require that you be enrolled at least half time. That's not likely in a certificate program, if I understood you correctly.
I checked Section 529 of the federal tax code and IRS Publication 970, Tax Benefits for Education. They don't address your question directly. The standard appears to involve whether one is enrolled at an eligible educational institution. The financial aid office at the university should be able to inform you regarding its experience with students using Section 529 funds to pay the tuition for the certificate program.
Publication 970 defines an eligible educational institution this way:
"For purposes of a QTP (qualified tuition plan), this is any college, university, vocational school or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution."
While QTP stands for a qualified tuition program, it is also synonymous with a Section 529 plan.
There are some state plans limiting adult learners from using the accounts as beneficiaries. If that's the case in your state, you might be able to roll over to another plan that doesn't have age-based restrictions. Be careful: If you received a state tax deduction for contributions to your state's plan, moving money out of the plan could trigger a state tax issue. When in doubt, talk to your tax professional.