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Under what circumstances will a withdrawal for purposes other than to pay or reimburse for eligible costs not be subject to penalty?

Under what circumstances will a withdrawal for purposes other than to pay or reimburse for eligible costs not be subject to penalty?

A penalty will not apply in the following circumstances:

  1. Where the funds are withdrawn due to the death or disability of the qualified beneficiary.
  2. Where the assets of the account are dispersed due to a bankruptcy.
  3. Where funds are transferred from one first-time home buyer savings account to another first-time home buyer savings account for the benefit of another qualified beneficiary.
  4. Where the withdrawal is due to a demonstrated immediate, financial hardship.
  5. Where the withdrawal is made due to the transfer or deployment out of Michigan of the qualified beneficiary who is either a member of the armed forces, a reserve branch of the armed forces, or the Michigan National Guard on active duty and where that service member provides acceptable proof of transfer or deployment to the Department of Treasury.