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

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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][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]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[/quote]

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 [b]within 2 years of opening the account[/b], the amount of the deduction may be "recaptured" and included in the account owner’s DC income."

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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. [/quote]

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.

[/quote]

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? [/quote]

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.

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My lord, tax policy is so incredibly stupid. [/quote]

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.[/quote]

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