Rollover into Illinois 529

Forum|Forum|2 years ago
March 12, 2024
2 replies
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I moved to Illinois in 2023 and shortly thereafter rolled over my previous state's 529 to Illinois'. In TurboTax, do I include the rollover contribution amount along with my regular contributions? Thank you.

AmyC

Employee

Mostly - just the contributions - not the earnings. For Illinois taxpayers, contributions to Bright Start are tax deductible. Contributions are deductible up to $10,000 per year ($20,000 if married filing jointly). You can also deduct the contribution portion (but not the earnings portion) of a rollover from another state's 529 plan.

Reference: College Savings

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enfinityTX

Are there limits on the rollover contributions form another state’s 529 plan? For instance, if I move from Florida to IL and roll over 100,000 (principal) to IL’s Brightstart 529, can I deduct 100,000 from my IL income and effectively save $4,950 in state tax (assuming 4,95 IL tax rate)?

Hal_Al

Employee

Q. Are there limits on the rollover contributions form another state’s 529 plan?

A. Yes. "Individuals subject to Illinois state income tax can deduct from their taxable income up to a maximum of $10,000 per year for contributions made toward the purchase of any College Illinois! prepaid tuition contract. Married couples filing jointly can deduct up to $20,000 per year."

Reference: https://www.collegeillinois.org/HowDoesItWork/FAQs.html#:~:text=Individuals%20subject%20to%20Illinois%20state,up%20to%20%2420%2C000%20per%20year.

Hal_Al

Employee

Yes, if the rollover was to one of IL qualified plans, “Bright Start” program, the "College Illinois" Illinois Prepaid Tuition Trust Fund, or the "Bright Directions". Reference: https://tax.illinois.gov/questionsandanswers/answer.206.html

You can only deduct the contribution portion but not the earnings portion) of a rollover from another state's 529 plan.

Reference: https://brightstart.com/tax-benefits/#:~:text=If%20you%20recently%20moved%20to,of%20that%20given%20calendar%20year.