Iowa Code r. 781-16.11 - Qualified withdrawals
This rule establishes the procedures for the payment of qualified withdrawals.
(1) The
participant must initiate a withdrawal for qualified or nonqualified
withdrawals. The participant must file the appropriate form with the
contractor.
(2) Qualified
withdrawals will be paid in one of three ways once the form has been received
by the contractor:
a. Directly to the eligible
educational institution or K-12 institution only.
b. Directly to the participant.
c. Directly to the beneficiary at eligible
educational institutions only.
(3) Withdrawals for the payment of tuition in
connection with enrollment or attendance at a K-12 institution may not exceed a
maximum of $10,000 per taxable year per beneficiary from all 529
plans.
(4) Each qualified
withdrawal will be comprised partly of contributions and partly of earnings,
based upon the same proportion that contributions and earnings comprise the
participant's account at the time of the withdrawal.
(5) Funds that are distributed to a
participant pursuant to this rule shall be reported to the IRS on a 1099-Q in
the tax year in which the withdrawal is made. The participant will receive the
1099-Q for any withdrawal paid to the participant. The beneficiary will receive
the 1099-Q for any withdrawal paid to the beneficiary or institution of higher
education. The individual receiving the 1099-Q must determine whether the
withdrawal was qualified or nonqualified.
(6) A participant may transfer any remaining
balance in one account to an existing or new account for another designated
beneficiary by completing a new participation agreement with the
contractor.
(7) The Iowa state
income tax treatment of contributions to and withdrawals from an account shall
be as set forth in Iowa Code chapter 422.
Notes
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