Greetings fellow Bogleheads,
I have a simple question re: 529 plans. I am considering opening one for myself - I'm 26 and plan to attend a MFA program in the future (4+ years?), possibly even attend grad school. I understand that one can withdraw assets from a 529 plan for "qualified educational expenses." If one's withdrawal is not for said expenses, one is taxed on the withdrawal and "an additional 10% tax penalty is applied to the earnings."
My question is then:Could one not simply use the earnings for "qualified educational expenses" and count the principle (which does not receive the additional tax penalty) as more tax-deferred investment space?
I.e. one could use the principle for retirement without being hit with the penalty, in the mean time it grows tax-deferred.
As always, thanks and cheers!