Using 529 to pay student loan, deductible?

[nwtaxlady]

Client has 529 plan for kids. They took out a distribution and used the money to make a payment on the daughters student loan. Is that ok? Or is the distribution taxable because it didn't go to pay tuition directly?

I tried to edit my post heading....won't let me. But the heading shouldn't say deductible. lol..

[ATSMAN]

If I recall correctly pre TCJA it would be a non qualified distribution to pay college student loan. I think TCJA now allows you to use 529 distribution to pay student loans, high school, religious school fees etc.

[nwtaxlady]

If I recall correctly pre TCJA it would be a non qualified distribution to pay college student loan. I think TCJA now allows you to use 529 distribution to pay student loans, high school, religious school fees etc.

I looked at this https://www.irs.gov/pub/irs-drop/n-18-58.pdf I just don't see it addressed here. It talks about the K-12 education and also rolling it over to an Able account.

[nwtaxlady]

I am thinking this thru.... If college student has student loans and IF they claimed education credits using the portion paid with student loans, and then down the road, parents take money out of the 529 to make a payment on the student loan then they would be double dipping right? So I THINK that the distribution would be taxable. Please correct me if I am wrong. So my question is, parents taking a distribution from the 529 plan to make a payment on daughters student loan, is it qualified or is it taxable?

[MDEA]

I do not see any where that paying loans is an educational expense payable by a 529 withdrawal.

[nwtaxlady]

I do not see any where that paying loans is an educational expense payable by a 529 withdrawal.

I agree. Just wanted to be sure their wasn't something out there that I didn't know about or missed. thanks