SalaamuAlaikum. Do I have to pay zakat on my kids college tuition savings plan? This money is only for their tuition and otherwise only accessible through penalty if used for anything else. Please clarify. JAK.

AAWW

For any pension plan or savings like the 529 college saving, you need to pay Zakah annually on the withdrawable amount after deducting all prescribed penalty and taxes and administrative fees. Please notice that you do have a limited access to the money under regular or humanitarian reasons. When choosing to withdraw, you will be charged different charges, like penalty and the like.

The above does not mean that you have to withdraw the money, rather you do the theoretical calculation to figure out the Zakah you owe Allah SWT.

Based on this approach, you do not pay more than 2.5% annually and on a part of the money than you can withdraw.