529 plan distributions for application expenses

A reader asked the question, “Can I use funds in my 529 plan to pay for college application fees, tests or test preparation?”

Unfortunately the answer is no. Though all of those are both costly and necessary, they are not “qualified education expenses” that are eligible to be paid for by 529 plan funds. In Publication 970, the IRS spells out that qualified expenses are limited to “expenses related to enrollment or attendance at an Eligible educational institution.”  (emphasis mine.)

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