529 Account Withdrawals

[Cappy]

I hope this is the right place to post this.

I've heard conflicting explanations about withdrawing money from a 529 account for purposes other than qualified education expenses.

I've been told that you can't withdraw anything without facing penalties, and other times I've been told that you can withdraw just the contributions portion without taxes or penalties.

Does anybody know which explanation is correct? I think the people saying you can't withdraw anything were confused.

Obviously, you can't withdraw the earnings portion, but the original contributions aren't tax-deductible, so I don't see why that money would be locked-up.

[atomicrc11]

That will depend on your state's plan. For example, in NY, you can deduct the contributions on your NYS income tax return. I know you can take out money tax and penalty free if your child goes to a school and gets a full scholarship.

[Taxplanr]

Penalty free 529 withdrawal

You may withdraw up to your basis penalty free without it being a qualifed education expense.