If you made a contribution to the 529 plan, you will be able to claim a subtraction from income. If you withdrew money from your 529 plan, you may have to add the withdrawal back to your income if it was not used for educational purposes.
What is the Delaware 529 plan?
You are not limited to in-state schools. You can use the funds at almost all accredited colleges and universities nationwide, many vocational or technical schools, K-12 programs, and eligible foreign institutions.
The Plan provides tax-advantaged accounts designed to help parents, grandparents and others pay for education expenses, reducing the possibility of debt.
What are the qualifications?
You won’t pay any taxes on your money as it grows. Plus, withdrawals for qualified education expenses like tuition, fees, and books are federal and Delaware income tax-free.
What are the limits?
As long as the money stays in the account, no income taxes will be due on earnings. When you take money out to pay for qualified education expenses, those withdrawals may be federal income tax-free—and, in many cases, free of state tax too.
What about rollovers?
Under federal tax laws you are allowed to roll over a 529 plan account for each beneficiary once during any 12-month period.
What if I don’t use it for education expenses?
Withdrawals from a 529 plan account can be taken at any time, for any reason. But, if the money is not used for qualified education expenses, federal income taxes may be due on any earnings withdrawn. A 10% federal penalty tax and possibly state or local tax can also be added.
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