If you’re still unsure about how things may affect your taxes, you may want to speak to a tax advisor for more information. You will not need to pay this additional 10% federal tax penalty if a withdrawal is made because the beneficiary has died or become disabled has received a scholarship (the withdrawal amount cannot exceed the scholarship amount) or if the beneficiary has enrolled in an eligible military academy (the withdrawal amount cannot exceed the value of the education). ![]() You will only pay taxes if you use your account funds to pay for non-qualified expenses. These accounts are designed to be flexible, with most expenses related to higher education qualifying as eligible. Remember, your account grows and earns interest, tax-free, and when you withdraw those savings to use for qualified educational expenses, you can spend it tax-free too. You will also have to pay back the state for any state income tax credits you have taken for contributions made to your account in relation to the amount withdrawn. There is a 10% federal tax penalty made on any earnings used to pay for non-qualified expenses. If you make a withdrawal from your account for a non-qualified expense, the earnings tied to that distribution will be considered taxable income. This means that if you withdrew funds for K-12 expenses from your Oregon College Savings Plan account and you claimed an Oregon tax benefit for that year’s contribution, the state of Oregon will recapture any Oregon State income tax benefits that you accrued on the principal portion of that withdrawal. *Qualified expenses at the federal level also include K-12 Tuition (up to annual $10,000 limit), but the State of Oregon does not extend its state income tax credit to K-12 expenses. Note, any money withdrawn from your account should be used for qualified expenses.* There is a $10 fee for electronic payment withdrawals. You can also send an electronic payment directly to them online as well. ![]() ![]() If you want to pay an eligible education institution bill or tuition, you can request checks directly made out to them online or by using our Withdrawal Form (PDF). If you have more than one investment, you can also decide which investment you’d like to pull money from. You can withdraw as little as $5 each time and transfer that money into any bank account linked to your Oregon College Savings Plan account. It’s easy to make withdrawals from your account online.
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