I opened a 529 account for my child with Bright start in 2021 and over last 4 years I have contributed around 35K to this account. As I live in Illinois, I got tax credits for this investment in prior years
Last year, I was told by my employer that Bright start is not one of the "approved" 529 funds that I can invest in. I work for a public accounting company that doesn't allow investment in any Illinois approved 529 programs.
Consequently, I was forced to rollover my 529 to Vanguard's 529 program which doesn't provide me any state tax benefits in Illinois. I received a 1099-Q from Bright start for 2024 but I have 3 questions:
- Will I have to pay taxes on the total amount that was rolled over to Vanguard's 529?
- Will Illinois clawback the tax benefits I received in previous years?
- How do I do I report this while filing state taxes?
