Can i pay for my gap year or PG year with my 529 account?
Distributions from 529 college savings plans are tax free only when used to pay for qualified higher education expenses such as tuition, fees, books, supplies and equipment, and room and board (if enrolled at least half-time). The expenses must also be paid for enrollment at a qualified educational institution (one which is eligible for federal student aid). Gap years usually do not qualify. If you take a nonqualified distribution to pay for your gap year, the earnings portion will be treated as taxable income to you. You will also have to pay a 10% tax penalty on the earnings.
