What are Qualified and Non-Qualified expenses?

Qualified expenses are post-secondary (ie: college) related expenses. The following are qualified expenses and are considered qualified withdrawals from an account: Tuition, Fees, Supplies, Equipment, and Books. Reasonable Room & Board expenses are considered qualified expenses if the student is enrolled at least half time.

In 2009 and 2010, withdrawals are tax-free if used for a computer or computer equipment. A withdrawal that is not for college expenses is considered a non-qualified withdrawal. The account owner is free to make withdrawals at any time.

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