Under the American Recovery and Reinvestment Act of 2009, qualified tuition programs (QTPs) also called 529 plans, had the list of Section 529 qualified higher education expenses expanded to include expenses incurred or paid in 2009 or 2010 for the purchase of any computer equipment, technology, internet access and related services to be used by the beneficiary and/or the beneficiary’s family during any of the years the beneficiary is enrolled at an eligible educational institution.
Prior to the act, qualified higher education expenses eligible for tax-free distributions from a 529 plan were limited to tuition, books, fees, supplies and equipment required for enrollment or attendance in an eligible educational institution. The reasonable costs of room and board also qualify, but only to the extent the amount is not more than the greater of the current allowance determined for federal financial aid purposes, or if greater, the actual invoice charged by institution.
Under the act, the beneficiary’s family includes the beneficiary’s spouse and other immediate family members including siblings, step siblings, parents, step parents, children, step children, and even first cousins. Interesting to note, grandparents are not included in the list.
And for the computer games fans out there………….sorry the act excludes software designed for sports, games, hobbies or entertainment, unless the software is predominantly educational in nature.
