My high school senior recently got accepted to a top-tier college for fall
2008. I have saved about $300,000 in a 529 account for her. Costs will be about $50,000 per year for 4 years plus beer and Cancun money.
How do 529 account withdrawals work taxwise? What records do I need to keep? I plan to withdraw about $60,000 per year...$50,000 for the fixed costs to the university (tuition, dorms and food) plus about $10,000 for travel home, clothes, computer etc etc. Will the 529 plan (Pennsylvania TAP "guaranteed savings plan") send me a 1099 type form for the withdrawals? If they send some of the money directly to the university, do they still 1099 me for that amount or for only the amount being sent to me directly to cover the out of pocket expenses? What out of pocket expenses qualify for 529 tax free withdrawals? I guess beer and Cancun probably do not unless consumed on campus and the trip is educational. What about college football tickets that are certainly recreational but are also part of college life?