Question: What are the rules for withdrawing money from a 529 college-savings plan to pay for high school expenses? - E.L., Oakland, Calif.
Answer: Federal law now allows you to withdraw up to $10,000 tax-free from a 529 plan each year to pay tuition for kindergarten through 12th grade. Most states follow the federal law, but a few have different rules. California, for example, charges a 2.5% state penalty tax on earnings used for K-12 tuition. Oregon residents may have to repay any tax deduction they received for 529 plan contributions if they use the money for K-12 expenses. Check with your state and plan before making the withdrawal. See collegesavings.org for links to state plans.
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