And, before you request that withdrawal, here are some tips to help you avoid some common mistakes.    

Withdraw only for qualified expenses

Any earnings you withdraw are free from federal taxes and the 10% penalty only if the money is used for “qualified” education-related expenses.  

Qualified expenses include: tuition, fees, books, equipment (such as computers, internet access, and computer software), certain room-and-board expenses, and expenses for students with special needs. You can also use up to $10,000 annually for tuition at qualifying K‒12 public, private, and religious schools; however, not all states allow for tax-free withdrawals on the state level. Be sure to check with your home state rules.

Nonqualified expenses include: student loan payments, travel costs, sorority and fraternity fees, and sports or entertainment expenses.

For more information, refer to IRS Publication 970, Tax Benefits for Education.

Take out the right amount

While this may seem obvious, it’s important because if you withdraw more than you need, that excess must be reported as taxable income by either you or the beneficiary. When you’re calculating your withdrawal amount, don’t forget to:

  • Subtract any scholarship or grant money from the amount you’re planning to withdraw.
  • Deduct any federal tax credits, like the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit.

Map out a withdrawal plan

Think about spreading out your withdrawals. If you do so over the 4 years of college, you’ll be less likely to withdraw more than your yearly qualified expenses.

And, if you can, keep making contributions. Even if the money won’t be in the account a long time, you’ll pay less income tax. You also won’t miss out if your state offers a tax deduction or credit. 

Don’t wait too long

Remember that electronic bank transfers from your 529 plan typically take 3‒5 business days, so make your withdrawal request in time for you to meet your payment deadline. If you want to receive a check, allow at least 10 business days. Keep in mind, if you haven’t added banking instructions to your account, give yourself additional time for your bank information to be verified. 

Lastly, you may want to pay the bill when you receive it and ask for your 529 withdrawal be sent to you. As long as you keep the documentation needed for IRS purposes, this can help reduce the anxiety of tight timelines.


All investing is subject to risk, including the possible loss of the money you invest.

For more information about any 529 college savings plan, contact the plan provider to obtain a Program Description, which includes investment objectives, risks, charges, expenses, and other information; read and consider it carefully before investing. If you are not a taxpayer of the state offering the plan, consider before investing whether your or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Vanguard Marketing Corporation, Distributor.

If you are not a Nevada taxpayer, consider before investing whether your or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.

The Vanguard 529 College Savings Plan is a Nevada Trust administered by the office of the Nevada State Treasurer.

The Vanguard Group, Inc., serves as the Investment Manager and through its affiliate, Vanguard Marketing Corporation, markets and distributes the Plan. Ascensus Broker Dealer Services, Inc., serves as Program Manager and has overall responsibility for the day-to-day operations. The Plan’s portfolios, although they invest in Vanguard mutual funds, are not mutual funds. Investment returns are not guaranteed and you could lose money by investing in the Plan.