What is a non-qualified withdrawal?
If the funds are withdrawn for a purpose other than to pay for qualified higher education expenses (except in the event of a beneficiary’s death, disability, scholarship or attendance at a military academy), or they are treated as withdrawn (for example if an ineligible beneficiary is named) there will be a 10% additional federal tax on the earnings portion of the distribution, as well as federal and state income tax on the earnings at the account owner’s tax rate.
If the funds are withdrawn for a purpose other than to pay for qualified higher education expenses (except on account of a beneficiary’s death or disability) or they are treated as withdrawn (for example if an ineligible beneficiary is named) there will be a 10% additional federal tax on the earnings portion of the distribution, as well as federal income tax on the earnings at the account owner’s tax rate.
Generally, if you withdraw funds from your account for a purpose other than to pay for qualified higher education expenses of the beneficiary, you must pay federal and Georgia income tax at the account owner’s tax rate on the earnings portion of the withdrawal. In addition to this income tax, federal law requires that you pay an additional 10% tax on the earnings portion of the withdrawal. The additional 10% federal tax is waived if the withdrawal is due to the beneficiary’s death or disability, or if the withdrawal is equal to a scholarship received by the beneficiary.
If the funds are withdrawn for a purpose other than to pay for qualified higher education expenses (except in the event of a beneficiary’s death, disability, scholarship or attendance at a military academy), or they are treated as withdrawn (for example if an ineligible beneficiary is named) there will be a 10% additional federal tax on the earnings portion of the distribution, as well as federal income tax on the earnings at the account owner’s tax rate. For Mississippi tax purposes, a non-qualified withdrawal will result in state income taxation on the earnings portion of the distribution.
If the funds are withdrawn for a purpose other than to pay for qualified higher education expenses (except in the event of a beneficiary’s death, disability, scholarship or attendance at a military academy), or they are treated as withdrawn (for example if an ineligible beneficiary is named) there will be a 10% additional federal tax on the earnings portion of the distribution, as well as federal income tax on the earnings at the account owner’s tax rate.
