Form 1099-Q and 529 Plan Withdrawals: The Basics
Published November 4, 2026
A 529 plan is a savings program for education costs. The IRS calls it a qualified tuition program, or QTP. When money comes out of the plan, the plan reports it on Form 1099-Q, Payments From Qualified Education Programs. This post explains what the form shows and when a withdrawal is generally tax free. IRS: Topic no. 313
What a 529 plan does
A state, or an eligible school, sets up the plan. You can prepay or contribute to an account to pay a beneficiary's qualified higher education expenses. Contributions are not deductible on your federal return. Earnings can grow tax free while they stay in the account. IRS: Topic no. 313
What Form 1099-Q shows
The form has three money boxes. Box 1 is the gross distribution. Box 2 is the earnings part. Box 3 is the basis, which is your return of the money you put in. The IRS says the gross amount is divided between earnings and basis. IRS: Topic no. 313
You should receive the form from each program that paid you. The IRS says it should be made available by February 2 of the year after the withdrawal. For a 2025 withdrawal, look for a form issued in early 2026. IRS: Topic no. 313
When a withdrawal is generally tax free
A withdrawal is generally not taxable when it pays for qualified higher education expenses. These include the tuition and other expenses required for enrollment or attendance at an eligible school. IRS: Topic no. 313
If the withdrawal is larger than the qualified expenses, part of the earnings may be taxable. The basis part is generally not taxable. IRS: Topic no. 313
Illustration only, with made-up numbers. Sam takes a $5,000 withdrawal in one year. The form shows $1,500 of earnings and $3,500 of basis. Sam paid $5,000 of tuition that year. The withdrawal matches the expenses, so the earnings are generally not taxable either. If Sam had paid only $4,000 of expenses, part of the earnings could be taxable.
Other uses the IRS names
Some other uses also count. A total of up to $10,000 over a lifetime can repay student loans of the beneficiary or a sibling. Interest paid with those funds does not qualify for the student loan interest deduction. Certain costs for elementary and secondary school also count. The rules for school costs changed at the end of 2025, so check the topic for the year of your withdrawal. IRS: Topic no. 313
Rollover to a Roth IRA
A special rule lets some unused 529 money move to a Roth IRA for the beneficiary. The move must be a direct trustee-to-trustee transfer. It is subject to the Roth contribution limit and a $35,000 lifetime limit. The 529 account must have been open at least 15 years. The rule applies to distributions made after December 31, 2023. IRS: Topic no. 313
When the amount may be taxable
A taxable part can appear when the withdrawal is larger than the qualified expenses. It can also appear when the money is used for something other than qualified expenses. Publication 970 explains how these rules apply. IRS: Publication 970
Records to keep
Keep the Form 1099-Q, tuition bills, receipts for required books and supplies, and the plan's statements. Note the date and amount of each withdrawal. These records help you show that the money paid qualified expenses. IRS: Publication 970
Common mistakes
Some people treat every Form 1099-Q as taxable income. The form does not decide the tax by itself. The split between earnings and basis matters, and so do the expenses you paid that year. Others mix up the 1099-Q with Form 1098-T from a school. Form 1098-T comes from the school. Form 1099-Q comes from the plan.
Check the dates too. A form may arrive in a different year than the withdrawal, so match the amounts to the right tax year.
Steps to take
- Find the Form 1099-Q from each plan that paid you.
- Read box 1, box 2, and box 3 on each form.
- List the qualified expenses you paid in the same year.
- Compare the withdrawal total with the qualified expenses.
- Keep the records. Ask the plan about any box that does not match your statements.
General information, not advice about your return.
Sources: Sources: IRS, Topic no. 313, Qualified tuition programs (https://www.irs.gov/taxtopics/tc313); IRS, About Form 1099-Q (https://www.irs.gov/forms-pubs/about-form-1099-q); IRS Instructions for Form 1099-Q (https://www.irs.gov/pub/irs-pdf/i1099q.pdf); IRS, Publication 970, Tax Benefits for Education (https://www.irs.gov/forms-pubs/about-publication-970) This is general information, not advice about your specific return.
