Can You Use A 529 Plan To Pay For SAT Prep?

Students may not use a 529 college savings plan to pay for college test prep, including SAT prep. 529 plan distributions used to pay for SAT prep are considered non-qualified and subject to income tax and a 10% penalty on the earnings portion of the distribution. Any state income tax benefits previously claimed may also be subject to recapture. 

Qualified 529 plan expenses for college include tuition, fees, books, supplies and equipment required for the enrollment or attendance of a designated beneficiary at an eligible education institution. Even if a college requires the SAT or ACT for admission, the standardized tests are not required for enrollment or attendance. SAT prep courses are paid before a student is accepted into a college and are not required for college enrollment or attendance.

SAT prep courses are generally taken while a student is in high school; however the cost of SAT test prep is not considered a qualified K-12 expense for 529 plans. Qualified K-12 expenses are limited to tuition in connection with enrollment or attendance (up to $10,000 per beneficiary, per year).

Re: Kathryn Flynn

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