What Is A 529 Plan Penalty And How To Avoid It

There are many ways to save and pay for college, and the absolute best way to do it varies depending on your specific situation. A 529 plan, which is designed to help you with higher education expenses, is a type of tax-advantaged account that allows you to save and invest money.As long as you withdraw that money for qualified expenses, you can do so without paying taxes on it. However, if you don't use the funds in your 529 plan for qualified education expenses, you may be assessed a tax penalty. Thankfully, it's fairly straightforward to avoid this 529 plan penalty, as long as you take a few precautionary steps. Table of Contents What Is a 529 Plan?Eligible 529 Plan ExpensesDetails Of A 529 Plan PenaltyHow To Avoid a 529 Plan PenaltyOther Ways To Avoid The 529 Plan PenaltyStay Within The Qualified Expenses To Avoid Penalties What Is a 529 Plan?