my529 Account Prepaid Access Card
December 15, 2023 | By Manisha Gupta
A 529 account is an excellent vehicle to save money for kids’ education. The contributions grow tax-free, and withdrawals from the account are tax exempt as long as they are used for qualified educational purposes. A list of qualified educational expenses can be found on the IRS website.
The challenging part has always been to keep track of the expenses when you start using the funds. It becomes especially hard when your college kid is making the purchases while away from home, in college and you ask them to save the receipts. That’s a huge ask for an 18-year-old! Come tax season, you receive the 1099-Q for all the withdrawals that you made from the 529 account, but you have no receipts to back those expenses.
Recently, the Utah529 plan solved that problem by announcing the my529 Access Discover® Prepaid Card. If you have a Utah529 account, this would make things much easier for you.
How does the card work?
- As the account holder, you apply for a card for yourself and your child (the beneficiary listed on the 529 account).
- Once you receive the card, you can login online and transfer a certain amount – very similar to loading cash in a prepaid phone card – from your 529 account to this card. The transfer limits and the daily spending limits can be found on the 529 website.
- Your child now has a prepaid card to use to buy books, mandatory supplies, a computer, software, etc.
- Everytime they make a purchase, it is reflected on the access card statement, and you have a clean log of all the expenses.
- You can use this card to make tuition payments. However, most educational institutions charge a hefty processing fee for using a debit/credit card to pay tuition. Also, you can track tuition payments easily, so no need to worry about transferring big balances on this card.
There are certain restrictions placed on this card that are put in place to protect the account/card holders.
- The my529 Access Card restricts usage at certain businesses, such as those that offer alcohol, gambling or adult entertainment.
- Applicants must have a beneficiary who is 17 years or older, a physical domestic (U.S.) address, and an active my529 account that has been open for 6 months.
Overall, this seems like a great addition to the 529 account offerings and will help in streamlining the expense tracking process. More information regarding the 529 Access Card can be found on the my529 account website.
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