What is the penalty for a non-qualified withdrawal from a 529 plan?

A non-qualified withdrawal from a California 529 plan is subject to an additional 2.5% California penalty tax on the earnings portion, but only if subject to the additional 10% federal additional penalty tax. California has one 529 plan option - ScholarShare. The ScholarShare 529 is the name of California's 529 Plan.

Are California 529 Withdrawals tax-free?

Tax-free withdrawals for qualified expenses: When you withdraw money from the California 529 plan to pay for qualified education expenses, including tuition, room and board, books and supplies, those withdrawals are entirely tax-free at both the federal and state levels.

How much can you withdraw from a 529 plan?

An annual withdrawal limit of $10,000 is applied to 529 plans for K-12 tuition expenses. If you’re using 529 plan funds to pay student loan debt, there is a lifetime withdrawal limit of $10,000. No matter how much you withdraw, you have to use the money for qualified educational expenses to avoid paying income tax and a 10% penalty. 2.