Question

529 issue

Forum|Forum|6 years ago
February 23, 2020
1 reply
0 views

I paid college expenses in 2019, but unfortunately took a 529 distribution for them Jan 2, 2020. How can I reconcile this?

D

DavidD66

529 plan distributions must be made during the same tax year that the qualified expenses are incurred. You have a couple of options to avoid tax and penalty.

You may roll the funds into the same or another 529 plan within 60 days.
If you pay education expenses in 2020, you can allocate your January 2020 distribution to them. If you don't have 2020 qualified education expenses, your distribution is subject to tax and penalty.

Your 2019 education expenses are potentially eligible for the education credits, since you didn't use 529 plan funds to pay for them.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"