Iowa Educational Savings Plans Trust

Qualified Expenses

Pay for more than just tuition.

Your account can be used for any purpose. However, for your withdrawals to be considered federally tax-free, the money must be used for qualified education expenses.

Two young men sitting on the floor of their dorm room doing homework.Qualified Higher Education Expenses

These are expenses related to enrollment or attendance at any eligible postsecondary school in the United States or abroad. These expenses can include:

  • Tuition

  • Certain room and board

  • Books

  • Supplies

  • Fees

  • Equipment, which includes certain peripheral equipment

  • Computers, computer software, internet access and related services

Eligible post-secondary institutions include:

  • 2- and 4-year colleges

  • Postgraduate programs

  • Certified apprenticeship programs

  • Postsecondary trade and vocational schools

Apprenticeship Programs

College Savings Iowa funds can be used as a qualified withdrawal for fees, books, supplies and equipment required for participation in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act.

K-12 Tuition Expenses

Up to $10,000 per beneficiary can be used to pay for tuition expenses in connection with enrollment at an elementary or secondary public, private or religious school. For Iowa tax purposes, the school must generally be in Iowa unless an exception applies.

State tax treatment of K-12 withdrawals is determined by the state(s) where the taxpayer files state income tax. If you are not an Iowa taxpayer, please consult with a tax advisor.

Education Loan Repayments

Payments paid as principal or interest on any qualified education loan of the Beneficiary or a sibling of the Beneficiary. The total amount that may be used from all accounts for repayment of loans of a Beneficiary may not exceed $10,000.

Refer to IRS Publication 970 for more detailed information on eligible expenses.

Roth IRA Rollovers

If your account has been open for 15 or more years, you can roll the money over to your Beneficiary’s Roth IRA in a direct trustee to trustee transfer without incurring federal tax penalties if the contributions and earnings you transfer have been in the account for more than five years. Only a lifetime maximum amount of $35,000 per beneficiary may be rolled over into a Roth IRA. At this time, Iowa law has not changed and a transfer of funds from a 529 plan to a Roth IRA is currently considered a nonqualified withdrawal under Iowa state law. Refer to the Program Description for additional Roth IRA conditions.

Non-Qualified Withdrawals

The earnings portion of a non-qualified withdrawals may be subject to federal tax, state income taxes and a 10% federal tax penalty as described in the Program Description.

© 2024 Iowa Educational Savings Plans Trust. All rights reserved.