For years, you’ve been saving for this moment: celebrating milestones, cheering your student on, and steadily building a 529 account to help them take the next step. Now graduation day is right around the corner, and your 529 account with The Education Plan is ready to support qualified education expenses.

Many parents (and students!) can feel both excited and a bit unsure with this big step ahead. That’s normal. Here’s some good news. It is easy to use your 529 funds. However, there are important details to remember that can make the entire process smoother.

This guide will walk you through a checklist to help you withdraw 529 funds with confidence and focus on what matters most: supporting your student as they start their next chapter.

1. Determine Your Qualified Distributions 

In 529 savings plan terms, a Qualified Distribution is a withdrawal that is used to pay for Qualified Expenses, which are defined by IRS rules and your plan.

Generally, qualified expenses include items like:

• Tuition and required fees

• Required textbooks, supplies, and equipment

• Room and board costs (when the student is enrolled at least half-time)

• Certain special needs expenses

• Computers, software, and internet access (when used primarily by the beneficiary during eligible enrollment years)

• Certain apprenticeship program expenses

You can see the full list of qualified expenses here. 

Before you make a withdrawal, list your student’s actual or known qualified expenses for the term (tuition, fees, books, laptop, etc.). This will help you match withdrawals to expenses and avoid surprises at tax time.

2. Decide Where to Send the Funds

With The Education Plan, withdrawals/payments can be made to:

• You (the Account Owner)

• Your Beneficiary (the student)

• An Eligible Educational Institution (the school)

How you choose depends on what you’re paying and when, but it’s ultimately up to you! 

Direct to the school

• Helpful for large bills like tuition/fees

• Reduces the chance of mixing education funds with everyday spending

To you or the student

• Helpful for “out-of-pocket first” expenses (books, supplies, tech)

• Works well when you want the funds delivered to the person who will be making the qualified purchases 

3. How to Request a Withdrawal 

You can request a withdrawal in three ways: 

• By logging into your account and selecting an amount to withdraw

• By calling the Plan at 1-877-337-5268 (be sure to have your plan info available)

• By mailing in the Withdrawal Request Form 

• By requesting a withdrawal on the Ready Save app

Make sure you keep proper supportive records for any withdrawn 529 funds. Even when expenses are qualified, it’s your responsibility to keep the paperwork that proves it.

4. Understand Timing 

Understanding processing times and cutoff dates is important to be aware of when factoring in withdrawal timing. 

Processing time

The plan generally processes a withdrawal distribution within three business days of accepting the request. At year-end, it may take up to five business days to process, plus time for proceeds to reach the recipient if the withdrawal is mailed. 

Trade-date cutoff

Withdrawal distribution requests received before the close of the NYSE (4:00 p.m. Eastern) are processed that day; requests received after 4:00 p.m. Eastern are processed the next business day.

Temporary withdrawal restrictions

The plan may place a hold on withdrawals:

• 5 days after a new contribution, before you can withdraw those funds

• 15 business days after an address change

• 10 calendar days after banking information is added or edited

If you’re approaching a tuition deadline, for example, consider the need update your address or bank details with the timing of requesting a withdrawal.

5. Keep Proper Records. Your Future Self Will Thank You

Here’s some very important information regarding use of your 529 plan funds and tax implications.

• Distributions are considered either Qualified or Non-Qualified under IRS rules.

• The account owner is responsible for keeping proof (receipts, invoices, enrollment statements, etc.) that withdrawals were used for qualified expenses.

• The plan is not required to tell the IRS whether your distribution was qualified or not.  A 1099-Q is issued annually during tax time for any withdrawal made. The account owner’s records serve as support, and the account owner determines whether or not a taxable event occurred. 

Creating a single location where you can store relevant records is a great idea and can save time and stress in the future. Create a “529 folder” (this can be digital or paper) and keep support for qualified uses, including these examples:

• Tuition/fee bills and payment confirmations

• Itemized receipts for books, required supplies, and equipment

• Proof of enrollment status (especially regarding room and board eligibility)

• Laptop/technology receipts (if applicable)

• Other support for qualified expenses

You’ve Saved For This Moment

Graduation and the next chapter that comes with it are exciting. The good news is that, with some advanced planning, using your 529 funds can be simple and straightforward. 

When you’re ready, log in to your account to review your balance.  Don’t forget to keep making contributions to the account, even while withdrawing, if you are able, or feel it will help with future education costs. If you have any questions about using the funds in your account, you can reach us at 1-877-337-5268. 

Congratulations on this milestone! Thank you for choosing The Education Plan to save for your child’s educational future. Keep us in mind for the future, as your 529 plan can be used for graduate school and many professional education expenses.

This information is for general educational purposes and should not be considered financial advice or tax advice. We recommend consulting with a tax professional or financial advisor for personalized guidance.