If you don’t use your college savings plan for eligible expenses, your 529 plan nonqualified withdrawals may incur a 10 percent penalty and will also be subject to income taxes. Both the penalty and the taxes apply only to your gains in the account. This is because the money you contributed was already taxed, so you’re getting tax-free growth only on what your investment earns.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
