Secure Act 529 opening date and student loans

Forum|Forum|5 years ago
November 22, 2020
1 reply
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Greetings,

With this new act allowing 529 funds to be used for student loans up to $10,000 backdated to 1/1/19, I am wondering if I can open new 529s for myself and my wife, deposit money into these accounts, and then immediately withdrawal to reimburse myself for student loan expenses that occurred prior to the 529 account opening date. This would be to capture the state income tax deduction for the amount paid in loans over that period.

Not A Product Question

Carl11_2

Employee

I don't see any benefit in this on the federal taxes, and am sure you don't either. But as for state taxes, that would depend on your state and what your state tax laws allow. Typically, you can't open an accout "after the fact". But with the COVID stuff there's no telling what your state tax laws may allow.

So the bottom line is, your question can't be answered until the state is known and someone familiar with your state tax laws sees your post, and has the knowledge necessary to provide you a useful response.

Hal_Al

Employee

As Carl, said it depends on which state.

In Ohio (my state), you would be allowed the state deduction for the approved 529 plan contribution. I think that is the most livelily interpretation for other states, as well.