Start Your New Year Right
Be sure to review your Year-End Statement(s), 1099-Q Form(s) if applicable, and the New Program Description for North Carolina's National College Savings Program (the NC 529 Plan).
2016 Year-End Statement
Statements will be available online by January 11, 2017. For those opting for online communication, just log into your Account(s) and select "Online Documents" to review your Account activity for 2016. Year-end statement(s) will be mailed to Participants who elected paper communication and should arrive mid-January.
If you made a Withdrawal from your NC 529 Account (either Qualified or Non-Qualified) during 2016, you will receive your Form 1099-Q from the NC 529 program administrator no later than January 31, 2017. The form will report the total amount you withdrew as well as the portion of the distribution that came from earnings on your contributions.
Typically, someone taking a Qualified Withdrawal used entirely for Qualified Higher Education Expenses (QHEE) such as tuition, books, fees, room and board, a student's computer, and supplies for the student enrolled at least half-time is not required to report the distribution. However, you should keep all receipts to document QHEE paid and talk with a tax professional if you have any questions about reporting.
If a Withdrawal is made for other than QHEE, any portion of earnings not used for higher education expenses should be reported as taxable income. Unless an exemption applies, the earnings portion of a Non-Qualified Withdrawal will be subject to federal income tax, an additional federal income tax of 10%, and potentially state income tax. Keeping documentation of your Withdrawal and talking with a tax professional about filing is recommended.
Upcoming Revision of North Carolina's National College Savings Program Description
Updates and revisions to the Program Description for the NC 529 Plan dated December 7, 2015 will be published mid-January, 2017 and available online as of date of publication
. Participants electing paper communication should expect to receive their mailed copy of the new Program Description by mid-February, 2017.