SERVICE & SUPPORT
Preparing for CollegeAmerica® withdrawals
Considerations before taking a withdrawal
The CollegeAmerica account owner or beneficiary is responsible for making sure an expense is qualified. Review what the IRS considers to be qualified education expenses to avoid taxes and penalties. Be sure to retain receipts and documentation to prove your withdrawals were used for qualified expenses.
If withdrawals are used for purposes other than qualified education expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. States take different approaches to the income tax treatment of withdrawals. For example, withdrawals for K‑12 expenses may not be exempt from state tax in certain states. Please consult your tax advisor for state-specific details. Review the CollegeAmerica Program Description (PDF) for a complete guide to your 529 savings plan.
The following is a list of qualified expenses:
Higher education
- Tuition and mandatory fees
- Required books, supplies and equipment
- If used primarily by the beneficiary while enrolled at an eligible higher educational institution:
- Computers or peripheral equipment (such as printers)
- Computer software
- Internet access and related services
- Room and board during any academic period during which the beneficiary is enrolled at least half-time in a degree, certificate or other program that leads to a recognized educational credential awarded by an eligible educational institution
- For students who live off campus, withdrawals may be used to pay up to the amount determined by the school for the room and board allowance for students who live off campus in its Cost of Attendance for the academic term
- Services for a beneficiary with special needs
- Effective December 31, 2018, amounts paid as principal or interest (up to a $10,000 lifetime maximum) on any qualified student loans of a designated beneficiary or their sibling
Tip: You can use your CollegeAmerica account for undergraduate and graduate school as well as specialized programs, such as medical or law school. Be sure to retain receipts and documentation to prove your withdrawals were used for qualified expenses.
Kindergarten through 12th grade
Tuition for an elementary or secondary private or religious school, up to a maximum of $10,000 incurred during the taxable year per beneficiary. Home school expenses are not considered a qualified education expense. Withdrawals for K–12 expenses may not be exempt from state tax in certain states.
Apprenticeship programs
Effective December 31, 2018, expenses required for participation in an apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act.
- Fees
- Books
- Supplies
- Equipment
Most community colleges, public and private four-year colleges, universities and vocational schools in the United States are eligible educational institutions. Some foreign institutions are also eligible. To find out if a school is eligible, go to the Department of Education’s website.
For the exclusion to be allowed, withdrawals taken from your CollegeAmerica account must match up with the payment year of the qualified expenses. If your payment is made in the current year for qualified expenses due in the first three months of the following year, generally the exclusion is allowed. If you have any questions, talk to your accountant or tax professional or refer to the IRS Publication 970 (PDF).
Example: You may withdraw $1,500 in December for qualified tuition expenses due for the spring semester beginning in January.
Tip: Avoid any confusion by sending the withdrawal proceeds directly to the eligible institution. Review the options for taking a withdrawal in the next section below.
Ready to take a 529 withdrawal?
Options for taking a withdrawal
If you need to pay education expenses for a different beneficiary, you’ll need to change the beneficiary on the account to the new beneficiary. Complete the CollegeAmerica Account Change Request (PDF) and the CollegeAmerica Distribution Request (PDF) to expedite the request.
Online
Log in to your account and click Sell to request the proceeds be sent to you by:
- Check via USPS (allow 7 to 10 business days)
- Check via expedited delivery (allow 2 business days)
- ACH to your bank on file (allow 1 to 3 business days)
If your bank isn’t already on file, complete the Add/Update Bank Information form (PDF). Once we receive and process the request, there is a 10-calendar-day hold before the option can be used. After it’s activated, you can use it any time.
Phone
Contact us at (800) 421-4225.
Fax/Mail
Complete the CollegeAmerica Distribution Request (PDF).
Note: Withdrawals payable to the account owner are reported under the account owner’s Social Security number.
If you need to pay education expenses for a different beneficiary, you’ll need to change the beneficiary on the account to the new beneficiary. Complete the CollegeAmerica Account Change Request (PDF) and the CollegeAmerica Distribution Request (PDF) to expedite the request.
If the withdrawal is for $25,000 or less:
Online
Log in to your account and click Sell to request the proceeds be sent to the beneficiary by:
- ACH to their bank on file (allow 1 to 3 business days)
If their bank isn’t already on file, complete the Add/Update Bank Information form (PDF). Once we receive and process the request, there is a 10-calendar-day hold before the option can be used. After it’s activated, you can use it any time.
Phone
Contact us at (800) 421-4225 to process an ACH to the bank on file or to send a check to the beneficiary.
Fax/Mail
Complete the CollegeAmerica Distribution Request (PDF).
If the withdrawal is for more than $25,000:
You must mail us the CollegeAmerica Distribution Request (PDF) with a signature guarantee.
Note: Withdrawals payable to the beneficiary are reported under the beneficiary’s Social Security number.
If you need to pay education expenses for a different beneficiary, you’ll need to change the beneficiary on the account to the new beneficiary. Complete the CollegeAmerica Account Change Request (PDF) and the CollegeAmerica Distribution Request (PDF) to expedite the request.
You’ll need the institution’s name and billing address (which could be different from the institution’s physical address) and the beneficiary’s school or student ID number.
Online
Log in to your account and click Sell to request the proceeds be sent to the eligible institution by:
- Check via USPS (allow 7 to 10 business days)
- Check via expedited delivery (allow 2 business days)
Phone
Contact us at (800) 421-4225.
Fax/Mail
Complete the CollegeAmerica Distribution Request (PDF).
Note: We cannot send withdrawal proceeds to the eligible institution electronically. Withdrawals payable to the eligible institution are reported under the beneficiary’s Social Security number.
Ready to take a 529 withdrawal?
Forms you may need
CollegeAmerica Distribution Request (PDF)
Request a distribution from a CollegeAmerica account.
CollegeAmerica Account Change Request (PDF)
Request a transfer of ownership or name a new beneficiary or successor owner.
Add/Update Bank Information (PDF)
Add or update bank information to purchase and/or sell shares.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors, Inc. and sold through unaffiliated intermediaries.
Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state's 529 plan, investors should consult a tax advisor. CollegeAmerica is sponsored by Virginia529℠.
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