How long does a deposit have to sit in a DC 529 account to get the tax break?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You get the deduction immediately. but if you roll-over within 2 years, the DC tax deduction is recaptured.

https://www.dccollegesavings.com/home/faqs.html#collapseare-there-any-special-tax-benefi

We do this every year- make a contribution, then a few weeks later, roll it over to our Vanguard 529. The money doesn't have to sit for any specified amount of time as long as THE ACCOUNT is more than 2 years old.

"If an account owner makes a non-qualified distribution or certain transfers or rollovers to another state’s program within 2 years of opening the account, the amount of the deduction may be "recaptured" and included in the account owner’s DC income."

That doesn't answer the most important question. Is OP's rollover one of these "certain transfers or rollovers to another state’s program" or not.

Good point! PP here who was talking about this as if it was a rollover, totally applied the wrong concept. OP isn't even talking about a rollover (which is where the 2 year account age requirement comes in). OP is talking about a qualified distribution. There do not appear to be any time limits/hold periods on that.

Oh, missed thst part too!

I was thinking of my situation, or I deposit and the tax deductible 529 and then roll it over to a better investment run by a different state.

But indeed OP is talking about spending their money almost immediately on qualified expenses.

In that case I would ask, Do you even need the 529 for a deduction, or can you apply a educational expense deduction directly?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You get the deduction immediately. but if you roll-over within 2 years, the DC tax deduction is recaptured.

https://www.dccollegesavings.com/home/faqs.html#collapseare-there-any-special-tax-benefi

We do this every year- make a contribution, then a few weeks later, roll it over to our Vanguard 529. The money doesn't have to sit for any specified amount of time as long as THE ACCOUNT is more than 2 years old.

"If an account owner makes a non-qualified distribution or certain transfers or rollovers to another state’s program within 2 years of opening the account, the amount of the deduction may be "recaptured" and included in the account owner’s DC income."

That doesn't answer the most important question. Is OP's rollover one of these "certain transfers or rollovers to another state’s program" or not.

Good point! PP here who was talking about this as if it was a rollover, totally applied the wrong concept. OP isn't even talking about a rollover (which is where the 2 year account age requirement comes in). OP is talking about a qualified distribution. There do not appear to be any time limits/hold periods on that.

Oh, missed thst part too!

I was thinking of my situation, or I deposit and the tax deductible 529 and then roll it over to a better investment run by a different state.

But indeed OP is talking about spending their money almost immediately on qualified expenses.

In that case I would ask, Do you even need the 529 for a deduction, or can you apply a educational expense deduction directly?

OP coming back in here....what a helpful thread. I do need the 529 for a deduction, because my income is too high to take an educational expense as a direct deduction.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You get the deduction immediately. but if you roll-over within 2 years, the DC tax deduction is recaptured.

https://www.dccollegesavings.com/home/faqs.html#collapseare-there-any-special-tax-benefi

We do this every year- make a contribution, then a few weeks later, roll it over to our Vanguard 529. The money doesn't have to sit for any specified amount of time as long as THE ACCOUNT is more than 2 years old.

"If an account owner makes a non-qualified distribution or certain transfers or rollovers to another state’s program within 2 years of opening the account, the amount of the deduction may be "recaptured" and included in the account owner’s DC income."

That doesn't answer the most important question. Is OP's rollover one of these "certain transfers or rollovers to another state’s program" or not.

Good point! PP here who was talking about this as if it was a rollover, totally applied the wrong concept. OP isn't even talking about a rollover (which is where the 2 year account age requirement comes in). OP is talking about a qualified distribution. There do not appear to be any time limits/hold periods on that.

Oh, missed thst part too!

I was thinking of my situation, or I deposit and the tax deductible 529 and then roll it over to a better investment run by a different state.

But indeed OP is talking about spending their money almost immediately on qualified expenses.

In that case I would ask, Do you even need the 529 for a deduction, or can you apply a educational expense deduction directly?

OP coming back in here....what a helpful thread. I do need the 529 for a deduction, because my income is too high to take an educational expense as a direct deduction.

My lord, tax policy is so incredibly stupid.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You get the deduction immediately. but if you roll-over within 2 years, the DC tax deduction is recaptured.

https://www.dccollegesavings.com/home/faqs.html#collapseare-there-any-special-tax-benefi

We do this every year- make a contribution, then a few weeks later, roll it over to our Vanguard 529. The money doesn't have to sit for any specified amount of time as long as THE ACCOUNT is more than 2 years old.

"If an account owner makes a non-qualified distribution or certain transfers or rollovers to another state’s program within 2 years of opening the account, the amount of the deduction may be "recaptured" and included in the account owner’s DC income."

That doesn't answer the most important question. Is OP's rollover one of these "certain transfers or rollovers to another state’s program" or not.

Good point! PP here who was talking about this as if it was a rollover, totally applied the wrong concept. OP isn't even talking about a rollover (which is where the 2 year account age requirement comes in). OP is talking about a qualified distribution. There do not appear to be any time limits/hold periods on that.

Oh, missed thst part too!

I was thinking of my situation, or I deposit and the tax deductible 529 and then roll it over to a better investment run by a different state.

But indeed OP is talking about spending their money almost immediately on qualified expenses.

In that case I would ask, Do you even need the 529 for a deduction, or can you apply a educational expense deduction directly?

OP coming back in here....what a helpful thread. I do need the 529 for a deduction, because my income is too high to take an educational expense as a direct deduction.

My lord, tax policy is so incredibly stupid.

It really is insane the crazy structures we come up with to not just have the government pay for public goods. One of our funny running jokes when we were overseas a couple of years ago was asking college students how much their tuition was, and then blowing their minds by telling them how much it is in the US.