Q. So I’m still questioning whether the funds need to be deposited into the 529 given that you cannot use 529 for healthcare/mental care?
A. You take the attitude that the government emergency money was used for those costs of attendance (e.g. healthcare/mental care/child care) so that you can say the 529 money was used for the other qualified costs (room, board, tuition, fees, books, computers, software and other course materials).
If you do not have enough qualified expenses, then yes, you need to redeposit the 529 money. But, technically, the money must be put back within 60 days of the "refund".
