529 wihdrawals when receiving tuition remission

[mrclancy]

I work for a university. There are proposals to tax free tuition received by employees and their children. Can I withdraw from their 529 plan to pay the tax and not be subject to the penalty?

[dcandmc]

If you are the owner of a 529 account, you can withdraw funds from the account for anything you want. If the funds are not used for qualified education expenses, however, you will incur income tax on the earnings portion of the withdrawal, and possibly be subject to a 10% penalty as well. Using funds from a 529 account to pay a tax bill would not be using those funds for a qualified education expense.