Moving funds from 529 to FL prepaid I'm interested in switching my kids 529 plans to a FL prepaid plan. However Florida pre-paid will not accept a direct rollover. So I'm told I'll have to withdraw the funds then pay the prepaid plan. I understand this may have tax consequences and a 10% penalty to withdraw funds. I also read that withdraws that are placed in another qualified plan within 60 days would not be subject to income tax on any gain.
I have two 529 accounts, One has $5500 in it, the other $55,000 in it (one for each child). I want to purchase two Prepaid plans (right now the cost would be just about identical to what I have in the 2- 529 accounts. So I would be using all the withdrawn $ on another qualified plan.
1. If I use all the funds on another qualified plan within the 60 days- would I owe any income tax on this $$?
2. Would I owe the penalty of 10% if all is going to another qualified plan without it being a trustee to trustee transfer?
Thanks for any feedback! |