Dear Dr. Don,

Do Section 529 withdrawals have to be executed in the same calendar year as the college expense?

— Karl Concurrent

Dear Karl,

They do if you want the distributions to be considered qualified distributions for higher education expenses. The government works very hard to ensure that you can’t finesse this issue. The Internal Revenue Service states that withdrawals must match with payment of qualifying expenses in the same tax year.

The Bankrate feature, “3 ways to make a 529 plan withdrawal,” provides some good tips on making these withdrawals. Of course, the last word on this is IRS Publication 970, Tax Benefits for Education.

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