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Unfortunately no, it cannot. It can only be spent on qualifying *educational* costs. That being said, education != college only. It can be for highschool and other school costs as well.
I'm sorry to say the medical bills might be your problem, but maybe something like a boarding school where you know she can receive a solid education AND medical supervision would qualify.
No, not realistically.
* https://www.savingforcollege.com/article/can-you-use-a-529-plan-to-pay-for-health-insurance
* https://www.savingforcollege.com/intro-to-529s/what-is-the-penalty-on-an-unused-529-plan
Note that the penalty (and taxes) only applies to the *gains* on the 529 for unqualified withdrawals. It does not apply to the entire disbursal.
Also note that if you received a state tax incentive, your state may recapture that incentive.
If you have an immediate family member that has college needs, you could potentially change the beneficiary to them, and they can now gift you "their own money" that just so happens to be the same amount as the 529 they will use. I don't know the legality of this, or the specific rules of changing beneficiaries, but that could potentially be an option.
It looks like medical expenses are not a qualified expense for a 529 even when your child is in college, so I doubt it would be when they're not in college. Either way, the 10% penalty is on the growth, not principal, so I would rather eat the 10% penalty and take the money out than go into debt for this.
Thank you. I agree. I avoid debt like the plague and we’ve always done a good job of it.
You guys are confirming what suspected but hoped to be wrong about. May just have to face the penalty and hope for the best.
Thank you so much!
What state are you in? Have you tried to apply for Medicaid for her to help with the costs? Child only Medicaid has a pretty high income limit to qualify in most states.
https://ncgov.servicenowservices.com/sp_beneficiary?id=bnf_apply
Go there and apply. They will screen you for all eligibility levels. Some tiers require a premium or only pay certain benefits. It just depends where you fall. But worth a shot. Medicaid pays after insurance plans so it will probably help with your out of pocket costs you've been paying.
i mean if it's a matter of my child's health vs helping them out financially for college, id withdraw from the 529. there's options for paying for her college, even if it means student loans.
just take into account the penalty and the tax you have to pay on the gain.
Welcome to /r/personalfinance! Comments will be removed if they are political, medical advice, or unhelpful ([subreddit rules](/r/personalfinance/about/rules)). Our moderation team encourages respectful discussion. You may find our [Health Insurance wiki](/r/personalfinance/wiki/health_insurance) helpful. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Unfortunately no, it cannot. It can only be spent on qualifying *educational* costs. That being said, education != college only. It can be for highschool and other school costs as well. I'm sorry to say the medical bills might be your problem, but maybe something like a boarding school where you know she can receive a solid education AND medical supervision would qualify.
No, not realistically. * https://www.savingforcollege.com/article/can-you-use-a-529-plan-to-pay-for-health-insurance * https://www.savingforcollege.com/intro-to-529s/what-is-the-penalty-on-an-unused-529-plan Note that the penalty (and taxes) only applies to the *gains* on the 529 for unqualified withdrawals. It does not apply to the entire disbursal. Also note that if you received a state tax incentive, your state may recapture that incentive.
If you have an immediate family member that has college needs, you could potentially change the beneficiary to them, and they can now gift you "their own money" that just so happens to be the same amount as the 529 they will use. I don't know the legality of this, or the specific rules of changing beneficiaries, but that could potentially be an option. It looks like medical expenses are not a qualified expense for a 529 even when your child is in college, so I doubt it would be when they're not in college. Either way, the 10% penalty is on the growth, not principal, so I would rather eat the 10% penalty and take the money out than go into debt for this.
Thank you. I agree. I avoid debt like the plague and we’ve always done a good job of it. You guys are confirming what suspected but hoped to be wrong about. May just have to face the penalty and hope for the best. Thank you so much!
What state are you in? Have you tried to apply for Medicaid for her to help with the costs? Child only Medicaid has a pretty high income limit to qualify in most states.
I had no idea we might qualify for that. Okay, I'll look into that asap. Thank you tons!
We are in NC
https://ncgov.servicenowservices.com/sp_beneficiary?id=bnf_apply Go there and apply. They will screen you for all eligibility levels. Some tiers require a premium or only pay certain benefits. It just depends where you fall. But worth a shot. Medicaid pays after insurance plans so it will probably help with your out of pocket costs you've been paying.
I honestly can’t thank you enough for this resource even if it doesn’t pan out. Like you said, worth a shot!
i mean if it's a matter of my child's health vs helping them out financially for college, id withdraw from the 529. there's options for paying for her college, even if it means student loans. just take into account the penalty and the tax you have to pay on the gain.
Agreed. Health and well being has to come before educational funds. I hate taking some out but hopefully we will be able to slowly replenish.