Is The Distribution From My 529 Plan Taxable?

Investing money into a 529 plan can be an effective strategy to save for college.  There are, however, some overlooked nuances related to some 529 plan distributions. And often times, those nuances are not addressed (or even discovered) until after the distribution has occurred and you are stuck paying taxes unexpectedly.

To make the discussion with clients easier, there is the “Is The Distribution From My 529 Plan Taxable?” flowchart.  It covers some of the most common issues for individuals who are planning to take a distribution from the 529 plan.  This flowchart considers:


  • What kinds of expenses qualify

  • Tax impact if the expense is nonqualified

  • Consideration if the beneficiary is disabled

  • The formula for calculating Adjusted Qualified Education Expense (AQEE)

  • Impact of American Opportunity Tax Credit and Lifetime Learning Tax Credit

  • The formula for calculating the tax associated with any distribution (if applicable)


Updated: 7/15/2019

  • Facebook

Castle Hill Capital is an investment advisor registered in Pennsylvania and Virginia. Any reference to the advisory services refers to Castle Hill Capital. Registration does not imply a certain level of skill or training nor does it imply endorsement by the state of Pennsylvania or Virginia.​ Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. Keep in mind investing involves risk.

Copyright © 2020 Castle Hill Capital. All Rights Reserved.