Episode
IRS Data: Families Paid Just $464 On Average In 529 Plan Penalties
- Published
- Jul 23, 2026
- Duration seconds
- 397
- Processing state
not_requested
Actions
POST https://stenobird.com/v1/public/podcasts/the-college-investor-audio-show-414113/episodes/irs-data-families-paid-just-464-on-average-in-529-plan-penalties/transcription-requests
Idempotently request low-priority transcript generation for this episode.GET https://stenobird.com/podcast/the-college-investor-audio-show-414113/irs-data-families-paid-just-464-on-average-in-529-plan-penalties.md
Read the agent-friendly Markdown representation of this episode resource.
Summary
New IRS data shows that the dreaded 529 plan penalty is far less common, and far less painful, than most families fear. According to the IRS Statistics of Income division's line item estimates for tax year 2023 (the most recent year with data available, released in June 2026) just 165,152 tax returns paid the 10% additional tax on non-qualified distributions from 529 plans and education savings accounts, totaling $76.6 million. That works out to an average penalty of about $464 per return for people reporting 529 plan distributions . Out of the more than 160 million individual returns filed for 2023, roughly 0.1% paid this penalty at all.