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[quote=Anonymous][quote=Anonymous]Can you explain how having your employer pay isn't like winning a scholarship from them?

I agree you will have to pay tax and penalty ON GROWTH but why on principle since there is NO WAY to tell if your employer is going to pay for a course years in advance?[/quote]

If your employer pays, it is compensation. Section127 of the internal revenue code allows for employers to pay some portion with preferred tax treatment, meaning they are compensating you and it is tax free.  It already has a benefit.  Scholarships are not compensation.  They are described in section 117. Just because you pay someone's tuition doesn't make it a scholarship. It might be a gift (if you pay your next door neighbor's bill), compensation, if it is your employer, or a scholarship, if certain criteria are met to avoid self-dealing.

As for the principal in the. 529: you can spend that on whatever you want, but an you withdrawal will be split proportionately between growth and principal (not like Rothschild) and you will be taxed on the growth and pay a penalty if the money is used for a nonqualified expense.

Stop being dense. Just ask your advisor and use common sense. Virginia has great information.[/quote]

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