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529 Account and Equestrian degree

Forum|Forum|4 years ago
July 1, 2021
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The beneficiary of my 529 account is attending an accredited university and obtaining a degree in equine studies. There are certain supplies required for the courses. Are these qualified expenses?

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Best answer by Hal_Al

Simple answer: yes. The key word being "required". Qualified expenses for a 529 distribution are more liberal than for an education credit.

From Pub 970: "Qualified Higher Education Expenses are expenses related to enrollment or attendance
at an eligible postsecondary school"...."The expenses for fees, books, supplies, and equipment required for the designated beneficiary’s participation in an apprenticeship program".

For computers and peripheral equipment, it says "if it's to be used primarily by the beneficiary
during any of the years the beneficiary is enrolled at an eligible postsecondary school". I think that rule would apply to other items, as well.

Hal_AlAnswer

Employee

Simple answer: yes. The key word being "required". Qualified expenses for a 529 distribution are more liberal than for an education credit.

From Pub 970: "Qualified Higher Education Expenses are expenses related to enrollment or attendance
at an eligible postsecondary school"...."The expenses for fees, books, supplies, and equipment required for the designated beneficiary’s participation in an apprenticeship program".

For computers and peripheral equipment, it says "if it's to be used primarily by the beneficiary
during any of the years the beneficiary is enrolled at an eligible postsecondary school". I think that rule would apply to other items, as well.

Carl11_2

Employee

When it comes to "qualified" education expenses, there are three basic categories.

1) Tuition

2) Books

3) Lab fees

That last one of lab fees is rather broad too. It includes supplies the student is required to purchase and provide for the course, and can even include the purchase of a laptop or computer if the course requires classwork to be done on line and/or submitted electronically on line. Generally, all this stuff is covered in the course syllabus, and that syllabus is your documented evidence of any lab fee requirements the student pays for.

With a 529 plan, you can also use that money to pay the unqualified but allowed expenses of room and board, provided that room and board was in direct support of the education. Additionally, if on campus room and board is/was available to the student but they chose to live off campus, then the amount claimed for off campus room and board can not exceed what it would have cost the student to live on campus.

If on compus R&B was not available to the student, then those limits don't apply. But still, the amount claimed for R&B must be reasonable. So no $5000 a night penthouse suites with steak and lobster for lunch and dinner every day. 🙂

H

hokierock

So I have a follow-on question to this, in the same vein. Daughter is attending a 2-yr college for an Associate's in Equine Business Studies. The school requires every student to have a horse (own or lease) for the duration of the studies. For what portion of this could I assume would qualify for usage of our 529 funds? This is a new one for me!

Hal_Al

Employee

If you acquired the horse specifically to meet the course requirement (you didn't already own it), I'm of the opinion that the entire expense would qualify for a 529 plan distribution.

I base that opinion on the wording in my previous reply:

The key word being "required". Qualified expenses for a 529 distribution are more liberal than for an education credit.

From Pub 970: "Qualified Higher Education Expenses are expenses related to enrollment or attendance
at an eligible postsecondary school"...."The expenses for fees, books, supplies, and equipment required for the designated beneficiary’s participation in an apprenticeship program".

For computers and peripheral equipment, it says "if it's to be used primarily by the beneficiary
during any of the years the beneficiary is enrolled at an eligible postsecondary school".