How 529 Plans Work With Scholarships and Merit Aid

Lucas and Luna break down a frequently overlooked scenario: what happens when a student wins a scholarship or merit-based aid that reduces their qualified education expenses. They walk through the IRS rules on penalty-free withdrawals, the tricky timing of the scholarship offset, and how to avoid double-paying taxes. Using a real-world example of a $30,000 academic scholarship at a state university, they show how a family can pull out exactly the right amount from a 529 plan without triggering the 10% penalty. They also cover the interaction with the American Opportunity Tax Credit and why the order of operations matters. Plus, a brief note on how Fexingo stays ad-free with listener support at buy me a coffee dot com slash fexingo. A must-listen for any family with a 529 plan and a high-achieving student. #529Plan #ScholarshipStrategy #MeritAid #CollegeSavings #Section529 #QualifiedExpenses #10PercentPenalty #IRS #AOTC #AmericanOpportunityTaxCredit #FinancialAid #EducationFunding #TaxPlanning #FexingoBusiness #BusinessPodcast #Finance #StudentCosts #CollegeSavingsPodcast Keep every episode free: buymeacoffee.com/fexingo