LII U. Code Notes State Regulations prev next. B which meets the other requirements of this subsection. Except to the extent provided in regulations, a program established and maintained by 1 or more eligible educational institutions shall not be treated as a qualified tuition program unless such program provides that amounts are held in a qualified trust and such program has received a ruling or determination that such program meets the applicable requirements for a qualified tuition program.
B a contributor to such program on behalf of a designated beneficiary ,. B Treatment of excess contributions If the aggregate amount of contributions described in subparagraph A during the calendar year by a donor exceeds the limitation for such year under section b , such aggregate amount shall, at the election of the donor, be taken into account for purposes of such section ratably over the 5-year period beginning with such calendar year. B Distributions for qualified higher education expenses For purposes of this paragraph— i In-kind distributions No amount shall be includible in gross income under subparagraph A by reason of a distribution which consists of providing a benefit to the distributee which, if paid for by the distributee, would constitute payment of a qualified higher education expense.
II in any other case, the amount otherwise includible in gross income shall be reduced by an amount which bears the same ratio to such amount as such expenses bear to such distributions. II by the amount of such expenses which were taken into account in determining the credit allowed to the taxpayer or any other person under section 25A.
II the total amount of qualified higher education expenses otherwise taken into account under clauses i and ii after the application of clause v for such year,. C Change in beneficiaries or programs i Rollovers Subparagraph A shall not apply to that portion of any distribution which, within 60 days of such distribution, is transferred— I to another qualified tuition program for the benefit of the designated beneficiary,.
II to the credit of another designated beneficiary under a qualified tuition program who is a member of the family of the designated beneficiary with respect to which the distribution was made, or. III before January 1, , to an ABLE account as defined in section A e 6 of the designated beneficiary or a member of the family of the designated beneficiary. Subclause III shall not apply to so much of a distribution which, when added to all other contributions made to the ABLE account for the taxable year, exceeds the limitation under section A b 2 B i.
D Special rule for contributions of refunded amounts In the case of a beneficiary who receives a refund of any qualified higher education expenses from an eligible educational institution, subparagraph A shall not apply to that portion of any distribution for the taxable year which is recontributed to a qualified tuition program of which such individual is a beneficiary, but only to the extent such recontribution is made not later than 60 days after the date of such refund and does not exceed the refunded amount.
B Amounts includible in estate of designated beneficiary in certain cases Subparagraph A shall not apply to amounts distributed on account of the death of a beneficiary. C Amounts includible in estate of donor making excess contributions In the case of a donor who makes the election described in paragraph 2 B and who dies before the close of the 5-year period referred to in such paragraph, notwithstanding subparagraph A , the gross estate of the donor shall include the portion of such contributions properly allocable to periods after the date of death of the donor.
B Treatment of designation of new beneficiary The taxes imposed by chapters 12 and 13 shall apply to a transfer by reason of a change in the designated beneficiary under the program or a rollover to the account of a new beneficiary unless the new beneficiary is— i assigned to the same generation as or a higher generation than the old beneficiary determined in accordance with section , and. C Special rules for siblings of the designated beneficiary i Separate accounting For purposes of subparagraph B and subsection d , amounts treated as a qualified higher education expense with respect to the loans of a sibling of the designated beneficiary shall be taken into account with respect to such sibling and not with respect to such designated beneficiary.
B in the case of a change in beneficiaries described in subsection c 3 C , the individual who is the new beneficiary, and. C in the case of an interest in a qualified tuition program purchased by a State or local government or agency or instrumentality thereof or an organization described in section c 3 and exempt from taxation under section a as part of a scholarship program operated by such government or organization, the individual receiving such interest as a scholarship.
B an individual who bears a relationship to such beneficiary which is described in subparagraphs A through G of section d 2 ;. C the spouse of any individual described in subparagraph B ; and. You may also proactively communicate your payment plan s with the school. Please Note — To ensure timely processing of requests, please mail any account-specific correspondences and check contributions to our processing centers at the addresses listed below.
Please do not send any account-specific mail to an address other than those listed below. The PA College and Career Savings Program is fully operational and available for current and prospective account owners. Due to a high level of interest in Treasury programs, we may not be able to answer every inquiry in real-time, or provide as much printed material as you may wish.
We encourage you to access your account online at pa If you need assistance, please email us at pa patreasury. Below you will find a link to some specific COVID FAQs, along with links to instructional videos explaining account basics such as how to make contributions and withdrawals and how to reset your online account password.
We remain committed to supporting your goal of saving and paying for education. Starting in , under the new tax package passed by the Republicans at the end of , known as the Tax Cuts and Jobs Act , plans may also be used to pay for K private school tuition.
When being considered for financial aid, the total value of the plan is assessed at the parental contribution rate of 5. Also, there are no income phaseout rules that apply to the contributors of the QTPs. The portion of the distribution considered a return of capital is never taxable, but the portion of a distribution attributable to earnings is only tax-free if it is used to pay the adjusted qualified educational expenses of the beneficiary.
That portion of earnings that does not pay for adjusted qualified educational expenses must be reported as income by the beneficiary. The beneficiary will receive a Form Q, Payments from Qualified Education Programs by the end of January in the following tax year from each QTP custodian that pays a distribution, showing the portion attributed to a return of capital and the portion attributed to earnings.
The 1 st part in figuring a taxable distribution is to calculate the adjusted qualified education expenses AQEE , which are the qualified educational expenses reduced by any tax-free educational assistance, including:.
The 2 nd part in the calculation requires that the earnings portion of the distribution, as shown on Form Q, be multiplied by the AQEE divided by the total distribution:. If the beneficiary receives both Coverdell distributions and QTP distributions, then the adjusted qualified education expenses must be allocated between the 2 distributions. Taxable earnings, if any, must then be calculated for each distribution:. Losses on QTP investments can be claimed by the beneficiary if the total of all distributions is less than the beneficiary's unrecovered basis, equal to the total amount of contributions to the account minus the total bases allocated to previous distributions.
If the beneficiary has more than one QTP account, then all the QTP accounts must be netted out to determine if there's any remaining loss. Therefore, QTP losses are no longer deductible. Any benefit furnished to a designated beneficiary under a qualified tuition program shall be treated as a distribution to the beneficiary for purposes of this paragraph. The total amount of qualified higher education expenses with respect to an individual for the taxable year shall be reduced-.
II by the amount of such expenses which were taken into account in determining the credit allowed to the taxpayer or any other person under section 25A. I the aggregate distributions to which clauses i and ii and section d 2 A apply, exceed. II the total amount of qualified higher education expenses otherwise taken into account under clauses i and ii after the application of clause v for such year,.
Subparagraph A shall not apply to that portion of any distribution which, within 60 days of such distribution, is transferred-. I to another qualified tuition program for the benefit of the designated beneficiary,. II to the credit of another designated beneficiary under a qualified tuition program who is a member of the family of the designated beneficiary with respect to which the distribution was made, or.
III before January 1, , to an ABLE account as defined in section A e 6 of the designated beneficiary or a member of the family of the designated beneficiary. Subclause III shall not apply to so much of a distribution which, when added to all other contributions made to the ABLE account for the taxable year, exceeds the limitation under section A b 2 B i. Any change in the designated beneficiary of an interest in a qualified tuition program shall not be treated as a distribution for purposes of subparagraph A if the new beneficiary is a member of the family of the old beneficiary.
Clause i I shall not apply to any transfer if such transfer occurs within 12 months from the date of a previous transfer to any qualified tuition program for the benefit of the designated beneficiary. In the case of a beneficiary who receives a refund of any qualified higher education expenses from an eligible educational institution, subparagraph A shall not apply to that portion of any distribution for the taxable year which is recontributed to a qualified tuition program of which such individual is a beneficiary, but only to the extent such recontribution is made not later than 60 days after the date of such refund and does not exceed the refunded amount.
No amount shall be includible in the gross estate of any individual for purposes of chapter 11 by reason of an interest in a qualified tuition program. Subparagraph A shall not apply to amounts distributed on account of the death of a beneficiary. In the case of a donor who makes the election described in paragraph 2 B and who dies before the close of the 5-year period referred to in such paragraph, notwithstanding subparagraph A , the gross estate of the donor shall include the portion of such contributions properly allocable to periods after the date of death of the donor.
Except as provided in subparagraph B , in no event shall a distribution from a qualified tuition program be treated as a taxable gift. The taxes imposed by chapters 12 and 13 shall apply to a transfer by reason of a change in the designated beneficiary under the program or a rollover to the account of a new beneficiary unless the new beneficiary is-.
The tax imposed by section d 4 shall apply to any payment or distribution from a qualified tuition program in the same manner as such tax applies to a payment or distribution from a Coverdell education savings account. This paragraph shall not apply to any payment or distribution in any taxable year beginning before January 1, , which is includible in gross income but used for qualified higher education expenses of the designated beneficiary.
Any reference in this subsection to the term "qualified higher education expense" shall include a reference to expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.
Any reference in this subsection to the term "qualified higher education expense" shall include a reference to expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act 29 U. Any reference in this subsection to the term "qualified higher education expense" shall include a reference to amounts paid as principal or interest on any qualified education loan as defined in section d of the designated beneficiary or a sibling of the designated beneficiary.
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