Rolling inherited iBonds into 529

[DisneyDiva]

My mother passed away earlier this year, and had 5 iBonds with significant accrued interest. I was named as the Transfer on Death beneficiary on the iBonds, and I’m in the process of getting them re-registered in my name. I have 529 accounts for both of my daughters – currently age 14 and age 20 (in college and still noted as my dependent when filing). Assuming we meet the income parameters, am I able to take advantage of selling the iBonds and contributing to their 529’s to avoid taxation on the interest, or does that not work since I wasn’t the original purchaser? If I am eligible, do I need to hold the iBonds in my name for a certain period of time prior to liquidating? Thanks for any insights!

[Hal_Al]

Q. Am I able to take advantage of selling the iBonds and contributing to their 529’s to avoid taxation on the interest, or does that not work since I wasn’t the original purchaser? 

A. It does not work since you were not the original purchaser. 

Reference: https://www.treasurydirect.gov/savings-bonds/tax-information-ee-i-bonds/using-bonds-for-higher-educa...

[DisneyDiva]

Thank you for sharing that article!  My apologies, as I'm sure I'm missing it - can you please point to where it states that you must be the original owner?  I'm not seeing it...

[Hal_Al]

It's in the wording.  The don't specifically say "original owner". Instead, they say "They must be issued in your name"

Reference: https://rbcc-int.fiscal.treasury.gov/savings-bonds/tax-information-ee-i-bonds/using-bonds-for-higher...