Backpack accounts function just like any other bank account (e.g., JPMorgan Chase, Wells Fargo). If the Backpack account is in the same name as the 529 plan owner or beneficiary, it’s a valid destination for 529 withdrawals.
In the event the IRS performs an audit and requires supporting evidence that the withdrawn 529 funds were used for Qualified Education Expenses, Backpack can assist you in providing that documentation (alongside the 1098-T form you receive directly from the university).
Using 529 funds
You can withdraw 529 funds to a bank account in the name of either:
The 529 Plan Account Owner (typically a parent or guardian), or
The Beneficiary (usually the student).
As long as the funds are used for Qualified Education Expenses - such as tuition, fees, or books - there’s no taxable event and nothing extra you need to report on your or your child’s tax return. The IRS Publication 970 provides more guidance around taxable implications for 529 withdrawals.
Important Disclaimer:
Backpack does not provide tax, legal, or financial advice. The information in this article is intended solely for educational purposes and general guidance. It is not tailored to your specific circumstances. Please consult your tax advisor, CPA, or 529 Plan for advice relevant to your particular financial situation, especially related to IRS reporting requirements, qualified educational expenses, and tax implications of using a 529 plan or other educational savings vehicles.