Always keep good expense records. Consult IRS Publication 970 - Tax Benefits for Higher Education, for available tax benefits for higher education costs. Consult a tax advisor to ensure distributions are correctly characterized on your income tax returns.
Only the account owner can withdraw money from the account, unless a Registered Investment Advisor has been authorized to do so. There is no minimum withdrawal amount, and each distribution from your account will consist of a portion of your contributions and a portion of your account's earnings. Distributions will be paid by check and we will send a confirmation of the distribution. For each distribution, you must send the completed and signed Distribution Request Form to us.
When taking money out of your SMART529 College Savings Plan, please read the information regarding the two types of distributions: qualified distributions and non-qualified distributions.
IRS Form 1099-Q
For each distribution, SMART529 will send a Form 1099-Q reporting the earnings portion of any distribution to the designated beneficiary if the distribution was made to the designated beneficiary or to an eligible educational institution for the benefit of the designated beneficiary. Otherwise, the account owner will receive the Form 1099-Q. Check with your tax advisor about filing this information on your tax returns. We also provide the information on Form 1099-Q to the Internal Revenue Service.
Financial Aid
Financial aid may be available even if you are invested in SMART529. The U.S. Department of Education (USDOE) has issued a student guide about financial aid and how it may be affected by investments in 529 Plans. In most cases, if the account owner is the parent of the designated beneficiary, the SMART529 Select account will be considered an asset of the parent when computing the designated beneficiary's financial aid needs. If the account owner is the designated beneficiary, the SMART529 account is considered an asset of the designated beneficiary. The potential impact on financial aid can vary depending on the owner of the 529 account, whether it be a parent, dependent student, grandparent, or someone else. You should consult with the USDOE Office of Postsecondary Education or the financial aid office of a college, university, trade school or adult vocational program for more information.