In January, some changes happened to tax-advantaged college savings accounts, or 529 plans. I bring this up now because high school seniors are graduating, and many will be heading off to college in the fall. I will revisit this issue at that time, but those of you who plan ahead by investing in a 529 are pretty likely to start planning ahead for the expenses of college.
One of the biggest changes that took place earlier this year was that computers and related equipment are now a qualified education expense under 529 plans. Although the rule is retroactive to January of 2015, I would not try to take the money out for a computer you purchased last year. The IRS may not look favorably on you taking money out of your plan in a different year than the expense was incurred. The plan covers both computers and peripheral equipment and computer software or internet access and related services. Make sure that the equipment and the software are for school related expenses, and not for playing World of Warcraft.
Another major change was that enacted was for money that was withdrawn from the 529 plan to pay for an expense that was then reimbursed by the school. As long as it is 60 days or less from the time the money was withdrawn, this money can be redeposited into the 529 without penalty. This could happen if your child enrolled in school for a semester, then got sick and had to drop out and the school refunded his or her tuition.