FAQs

You can use your True Link 529 Visa® Prepaid Card anywhere Visa is accepted, including online bill-pay. Your card can be used for anything; however, if you use the card to pay for something that is not a qualified expense, you’ll have to pay income tax on the earnings portion of the applicable amount withdrawn from your VT29 account, plus a 10% penalty on such earnings. 

The list of qualified expenses includes, but is not limited to:

• Tuition

• Housing costs

• Textbooks and supplies

• Computers and educational equipment

• Student loans

A VT529 account can be used to pay for a number of education costs. These may include:

• Tuition or fees for eligible universities, technical schools, training programs, and more

• Computers and educational equipment

• Books and supplies

• Housing and rent

• Student loans

Keep your receipts and documentation for all qualified expenses in case the IRS wants to see them. We don’t require proof of your expenses, but you should have it for your records.

You may have to pay income taxes, plus an additional 10% federal tax and a state tax on the earnings portion of any withdrawal for a non-qualified expense. 

Yes. If you make a withdrawal from your account for a non-qualified expense, the earnings tied to that distribution will be considered taxable income. There is a 10% federal tax penalty made on any earnings used to pay for non-qualified expenses. You will also have to pay back the state for any state income tax credits you have taken for contributions made to your account in relation to the amount withdrawn. Remember, your account grows and earns interest, tax-free, and when you withdraw those savings to use for qualified educational expenses, you can spend it tax-free too. These accounts are designed to be flexible, with most expenses related to higher education qualifying as eligible. You will only pay taxes if you use your account funds to pay for non-qualified expenses.

There are a few exceptions. You will not need to pay this additional 10% federal tax penalty if a withdrawal is made because the beneficiary has died or become disabled; has received a scholarship (the withdrawal amount cannot exceed the scholarship amount); or if the beneficiary has enrolled in an eligible military academy (the withdrawal amount cannot exceed the value of the education). If you’re still unsure about how things may affect your taxes, you may want to speak to a tax advisor for more information.

If you end up with excess funds saved in your VT529 account, you have a few options.

You can transfer your excess funds to a different beneficiary penalty-free (as long as they are considered a “member of the family”).

You can hold on to the funds to use for a beneficiary in the future (possibly a grandchild) or even for yourself at a later time, also penalty-free.

If your beneficiary gets a scholarship, you can withdraw up to the amount of the scholarship without a penalty or additional tax, but you will have to pay income tax on the earnings.

And, you can always withdraw your remaining funds as a non-qualified withdrawal, but the earnings portion (not the amount you contributed) of a non-qualified withdrawal typically is subject to federal income tax, and an additional 10% federal penalty tax.

Yes. Student loans are considered as qualified expenses.

Yep. You can use the funds in your account to help pay for computers, peripheral equipment (such as printers), software, or even internet access fees, so long as these tools and services are being predominantly used by the beneficiary while they’re enrolled at an eligible college or university.

Yes. You can use your account’s funds to pay for room and board expenses, but only for students who attend post-secondary schools (colleges, universities, etc.) at least half-time, and so long as the expenses don’t exceed the room and board allowance, determined by the school, that’s included in the cost of attendance.

Yes, you can use your account to pay for qualified expenses at some foreign schools, provided they are accredited and are eligible to participate in federal student aid programs. It’s best to contact your school directly to see if they qualify.