529 Plans Aren’t Just for Kids

You don’t have to be college-age to use the money tax-free, but there are stipulations.

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Question: Can I use money tax-free from a 529 college-savings plan to pay for continuing education? Or do I have to be enrolled in a college degree or certificate program? -C.B., Bethlehem, Pa.

Answer: As long as you are taking the course at an eligible institution, the cost of tuition, fees, required books and software can be withdrawn tax-free from the 529, even if you aren’t in a degree or certificate program. Eligible institutions include accredited colleges, universities, vocational schools and other postsecondary educational institutions that participate in a student aid program administered by the U.S. Department of Education (see FAFSA.gov's Federal School Code Search tool). Nearly 4,000 U.S. institutions qualify, along with some outside of the U.S., says James DiUlio, chairman of the executive board of the National College Savings Plan Network.

Continuing education needed to maintain a professional license may also be eligible, depending on the institution where you take the course.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.