I am about to make my first withdrawal from my son’s 529 and am confused by the amount I can allocate to room & board.
My son is a freshman and about to complete his first semester. He lives in private student housing with a 1-year lease. The lease is front-end loaded with a total of 10 equal payments that began in May. I will only make 2 payments in 2018 (Jan & Feb).
As I understand the Qualified Education Expense (QEE) 529 withdrawal rule, I can only withdraw an amount for a qualifying expense that I have already paid AND the QEE amount for Room & Board can’t be greater than the school's Cost of Attendance (COA).
To keep the numbers simple:
School Room & Board COA per semester $ 5,000
Private Dorm Payments Made - 2017 $12,800
Private Dorm payments remaining (Spring ’18) $ 3,200
So, my question is this: Can I withdraw $10,000 in 2017 for Room & Board, even though it exceeds the semester COA but is equal to the full year COA? If not and I can only withdraw $5,000, I will only be able to withdraw $3,200 (actual 2018 payments) next semester, not the full $5,000, leaving me short $1,800.
In other words, does the IRS look to the semester COA amount or full year COA amount when determining if the withdrawal is Qualified or Non-Qualified?
Any advice on this would be most appreciated.