In the past, electronics, computers and other similar equipment qualified as a college expense, meaning the money could be withdrawn tax free and without a penalty.

This year, because of changes made in tax legislation for 2011, these items do not qualify unless they are specifically required by the college. Parents need to check exactly what is required by their child's college to know what can qualify as a 529 expense. This rule could be changed and not made to apply to the current tax year, but, as of now, it does, [says Eleanor]Blayney[, CFP®, Consumer Advocate for CFP Board].

"I don't think it is a huge sacrifice for parents in comparison to how much more other college expenses are and the many other items that the 529 funds can be spent on," Blayney says, but it is a potential added expense the CFP Board is warning parents about. Read more >

Financial Advisor
Karen DeMasters
August 23, 2011