I transferred money from a traditional stock fund into a 529 account for my childs college fund. I am being penalized for the gain on my federal taxes. Is this correct?

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I transferred money from a traditional stock fund into a 529 account for my childs college fund. I am being penalized for the gain on my federal taxes. Is this correct?

Yes. Transfer = sale.

I transferred money from a traditional stock fund into a 529 account for my childs college fund. I am being penalized for the gain on my federal taxes. Is this correct?

Depending on your state of residence and the plan chosen you might get some state income tax benefit for the contribution.

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