Say a school has a published cost of off-campus housing of $12,000 for an academic year that crosses calendar years. If a full-time student signs a 12-month apartment lease for $1,300 per month that runs from August through July, how much of that lease is qualified reimbursable from the 529 plan in the first calendar year associated with that academic year (the part that runs from August through December)?
I recognize that the total lease amount of $15,600 is more than the $12,000 that's allowable for the academic year, but I am not quite sure how to split the allowable $12,000 across the different calendar years that are involved.
For instance, 5 months at $1,300 per month is $6,500. Can the full $6,500 be a qualified reimbursement in that first calendar year, leaving $5,500 for the remainder of the academic year? That would seem to be consistent with "less than the total allowable for the academic year, in the year the expense was incurred and paid."
If not, what's the appropriate timing logic involved?
Thanks in advance.
I don't think you're going to find a firm answer to that question, just opinions.
My opinion is that you are limited to $6000 (half the full year $12,000) for the first term (I assume fall 2024). That means you'll be limited to $5500 for the spring term, since that is all you actually will pay. But, since you'll probably be starting payments again in September, you can withdraw another $6500 from your 529 for the fall term next year ($12,000 total for 2025).