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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Hi there DCUM, could use the hive mind here.

Here is my situation - DD is a rising senior.  We are DC residents, and have emptied out our DC 529 account to pay for the first 3 years of college, and have savings accounts and I Bonds to pay for senior year.

Contributions to the DC 529 are deductible on our DC taxable income, up to $8,800 per year.  If I cash out the IBonds, and then deposit those into a DC 529, is there a certain amount of time they have to sit in the account before they are deductible?  Can I cash out the IBonds on September 1, deposit them into the DC529 account on September 2, and then use the DC529 to pay the tuition bill on September 3 and still get the tax break?  Or do I have to let those funds sit in the account for a certain amount of time?

Thanks for your input![/quote]

You can deduct up to $8000 per year (for a married couple), not $8800.[/quote]

Good catch.  Also, OP, you probably know this, but you can't quite do all these things quite this fast.  IF you redeem the I-Bonds, it usually takes around 2 (or maybe 3 sometimes) business days for the cash to hit your bank account.  Then if you immediately do the 529 transaction that day, it will take another business day or two for the funds to be registered as deposited/settled into the 529 account. So I would give at least a week to actually execute all this, and probably a bit more than that if you get caught on a weekend somewhere in there.[/quote]

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