Can I Tap 529 Pan to Pay Graduate School Rent?

Dear Dr. Don, My daughter just got accepted into a full-time master's degree program. For the past year, she has been living in an apartment with a roommate. Can I use her 529 plan funds to pay her portion of the rent while she is a full-time student

Thanks, -- Ben Benefits

Dear Ben, Within certain limitations, you can use 529 plan funds to pay the rent as long as the student is enrolled at least half time. IRS Publication 970, Tax Benefits for Education, spells it out:

You should contact the school to learn about qualified room and board costs. One rule of thumb pertains here: It's important to take the distribution from the 529 plan in the same tax year that you pay the qualified expense.

The 529 plan may also be used for utilities as long as the total expense is below the total established by the school.

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