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Question for the Money Doctors

Question submitted on Jun 22, 2015.

Question

We are considering hiring an education consultant to work with the kids to plan for and apply to colleges. This person helps them fill out college applications, write essays, visit colleges, apply for scholarships, prepare for ACT/SAT tests, etc. Website is http://www.collegeexpert.net/.

I am wondering if this is an expense that would qualify as an approved education expense that we could fund from either the Education Roth or the 529 plans. Please let me know how we could best confirm this. I don’t want do anything that would incur penalties.

Answer

A qualified education expense is one that is required by an educational institution, such as tuition and fees.  Room and board, supplies, and equipment are also generally eligible expenses for purposes of 529 college savings plans and early IRA distributions.  The consulting you described is not a required expense for enrollment or attendance; and is, therefore, not eligible to be withdrawn without tax or penalty.

 


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