> (Hell, my wife's parents saved up a 529 plan, and then she went to a state school on a full scholarship. Now we're apparently allowed to spend the 529 money t

> (Hell, my wife's parents saved up a 529 plan, and then she went to a state school on a full scholarship. Now we're apparently allowed to spend the 529 money to put a down payment on a house as a young couple, without any tax penalty. How is this allowed!?) I'm not sure it is allowed. There must be some other transaction happening to make this without penalty. [1] Also, why is everyone on this thread [not you] speaking of a 529 as if it's some elite 1% benefit? It's open to anyone. Most states have a $25 minimum, a lot of states have no minimum contribution at all [2]. [1]http://www.montereyherald.com/article/ZZ/20111006/NEWS/111008648 http://www.montereyherald.com/article/ZZ/20111006/NEWS/11100... [2]http://www.savingforcollege.com/compare_529_plans/?plan_question_ids[]=387&page=compare_plan_questions http://www.savingforcollege.com/compare_529_plans/?plan_ques... Edit: after some more research, it sounds like it may have been rolled over into an IRA for use with a first-time homebuyer exemption. See (http://finance.zacks.com/convert-529-ira-10479.html http://finance.zacks.com/convert-529-ira-10479.html) under "Penalty Exceptions".