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Old 03-14-2014, 08:12 PM
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529 distribution and refunded

I took out distribution from 529 and 3 months later returned the money to plan because my son did get scholarship. I did get 1099Q from plan and they have to issue this when fund is redeposited after 60 days. I have a copy of the check to proof this. How do I do my tax reflecting this event.
Thank you



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Old 03-15-2014, 02:58 AM
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Originally Posted by waynekim View Post
I took out distribution from 529 and 3 months later returned the money to plan because my son did get scholarship. I did get 1099Q from plan and they have to issue this when fund is redeposited after 60 days. I have a copy of the check to proof this. How do I do my tax reflecting this event.
Thank you
You might contact your529 provider & see if anything can be done. you did a withdrawal, and not a loan. And I believe there is also a 60 day limit ,by the fed's, to deposit that money back into the plan. Otherwise taxes are due - federal, state, and there's also a 10% early withdrawal penalty will have to pay a 10% federal penalty tax on the earnings portion of the non-qualified distribution. The principal portion is not subject to tax or penalty. If additional penalties apply,you also may need to complete IRS form 5329.



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Old 03-15-2014, 04:11 AM
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Quote:
Originally Posted by waynekim View Post
I took out distribution from 529 and 3 months later returned the money to plan because my son did get scholarship. I did get 1099Q from plan and they have to issue this when fund is redeposited after 60 days. I have a copy of the check to proof this. How do I do my tax reflecting this event.
Thank you
If the 529 withdrawal was within the last 60 days you can roll over to another 529 plan with yourchild as beneficiary. Indicate to the receiving plan that it is a rollover and provide basis and earnings breakout. If not within last 60 days, minimize the tax damage by identifying any tax-free scholarships or grants your son may have receiving that qualify for a waiver of the 10% tax penalty.



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