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Are non-qualified withdrawals from a 529 plan penalized on the original contributions?
My understanding is that early (nonqualified) withdrawals from a 529 plan are penalized at 10%, plus taxed over any capital gains.
Does the 10% penalty apply to capital/investment gains only, or to the cost basis (original contributions) as well?
If the 10% penalty is only imposed on capital gains, how is it determined whether the money pulled out is from the original contributions or from gains?
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‎June 6, 2019
12:28 AM