Can I Use 529 Funds To Pay Student Loans

Will that affect the amount of student loans im eligible to borrow in. You can withdraw funds from a 529 plan at any time for any reason but the earnings portion of a non qualified distribution is subject to ordinary income.

529 Funds Can Be Used To Pay Student Loans And Apprenticeships

can i use 529 funds to pay student loans

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Don im considering whether to pay off the student loan i borrowed this year with some of my 529 plan funds.

Can i use 529 funds to pay student loans. Under the secure act of 2019 plan holders can use 529 plans to pay for tuition and qualified expenses of apprenticeship programs and can withdraw a lifetime maximum of 10000 to pay down student. Paying student loans with 529 plan funds a new law allows borrowers to use 529 college savings plans to pay off student loan debt. Using 529 plans to repay student loans.

The new bill addresses this hurdle by allowing you to use your 529 funds to pay your student loans. The tax reform 20 legislation will allow 529 plans to be used to make tax free payments of principal and interest on qualified education loans of the beneficiary and the beneficiarys siblings starting in 2019. Funds set aside in a 529 account can be withdrawn and used to pay off student loans but because those loans are not a qualified expense the amount of earnings withdrawn will be subject to federal income tax as well as a federal tax penalty valued at 10 percent of the withdrawal.

Anything that provides families with more flexibility in how they use 529 plans would. President trump is expected to sign a spending bill that includes this provision friday. Using a 529 plan to pay student loans.

Sign up for free newsletters and get more cnbc delivered to your inbox. Unfortunately student loans are not considered to be a qualified higher education expense for 529 plans under current law. The amendment would let those with 529 spending plans use the money toward expenses related to registered apprenticeship programs as well as qualified education loan repayments.

Some students graduate with leftover money in their 529 college savings plan and would like to use this money to pay off all or part of their student loan debt. Home schooling apprenticeship fees and most notably student loans could all be paid for with 529 plans. Student loan borrowers may soon be able to pay down their debt using money from 529 savings accounts.

New Law Expands Uses For 529 College Savings Accounts The New