Investing money into a 529 plan can be an effective strategy to save for college. There are, however, some overlooked nuances related to some 529 plan distributions. And often times, those nuances are not addressed (or even discovered) until after the distribution has occurred and the client is stuck paying taxes unexpectedly.
To make the discussion with clients easier, we have created the “Is The Distribution From My 529 Plan Taxable?” flowchart. It covers some of the most common issues for clients who are planning to take a distribution from the 529 plan. This flowchart considers:
Updated for 2020 (including The SECURE ACT)