Daily Court Reporter - News Want to Make 529 Re-Contribution? No Problem!
Want to Make 529 Re-Contribution? No Problem!
As the season drifts into fall, college is in full session. You’ve already covered your child’s qualified higher education expenses, including tuition, through payments from your CollegeAdvantage 529 Plan. However, your child has now decided to drop a class. Because it’s too late to join a new course, the college has sent you a refund check. As you took the money out of your Direct 529 plan, you would like to place the refund into it to continue the 529 tax advantages as well as to avoid any potential tax ramifications as the returned funds could now be considered part of your income if not re-deposited. Additionally, you are concerned that the original transaction could now be treated as a non-qualified withdrawal because the funds are no longer being used to cover qualified higher education expenses.
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Date Published: October 19, 2016