As summer winds down, parents are getting ready to send their students to college — and to get notices that tuition payments are due.
By now you’ve likely made a list of the various financial accounts that you could use for your student’s education costs. Some of the most common are 529 plans, savings bonds and IRAs.
Here are some things to think about before you send a check for this semester’s tuition.
If you’ve been a good planner and saved money in a 529 education savings plan, now’s the time to consider taking a withdrawal. Distributions from 529 Plan accounts to pay for qualified higher education expenses (QHEE) are tax-free when used to directly pay to the college or to reimburse the account owner (which is typically the parent) for college costs incurred during the year.