Last month I posted questions on use of 529 plan for college expenses, and we all agreed that per Pub 970, off-campus room and board expenses drawn from a 529 plan are qualified expenses up to but not exceeding the on-campus room and board rate, and the on-campus rate is that posted by the University's financial aid office.
My daughter's university does provide these amounts, but only for the Fall
2011 and Spring 2012 semesters combined, not individual semesters. They show a Room amount and a Board amount for both semesters that add to approximately $9680.I estimate my daughter's Fall 2011 room and board actual expenses will be approximately $5750, which is more than half of the $9680 on-campus rate (half is $4840).
Pub 970 does not adequately address the common case where for the first academic year, there is only one semester in the tax year (in 2011 only the Fall 2011 semester), and in the last academic year, there is only one semester in the tax year (in 2015 the Spring 2015 semester).
Since my daughter is incurring expenses for only one semester in the 2011 tax year, if the off-campus room and board are $5750, can I draw this entire amount tax free from her 529 plan (it is less than the published $9680 for two semesters), or to keep tax free and no unqualified distribution, do I have to limit the distribution to half the University's published rate ($4840)? Half of their annual rate is not published.