529 Excess Withdrawal

Forum|Forum|4 years ago
May 7, 2021
1 reply
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Hi, I withdrew my entire 529 to my college in 2020, which was a couple thousand over the educational expenses for the two remaining semesters (I graduate in May 2021). The college returned the excess money in 2021.

Do I pay taxes on this excess withdrawal for the year 2020 or 2021?

Hal_Al

Employee

2020, the year of the distribution (withdrawal)

enfiteosisAuthor

Thanks for the response!

In 2021, I have spent a few thousand dollars on housing and food while enrolled, which could probably cover the excess withdrawal.

However, I withdrew and made the payment to the college in 2020 and they only returned it in 2021. How would this work?

Hal_Al

Employee

I don't think there's official IRS guidance on that situation. I'm of the opinion that since the money was refunded in 2021 and then spent, on qualified expenses, in the same year (2021), it's still a qualified distribution.