We rolled approx. $6k from another states plan into the newly established NY 529 plan. Is that considered a contribution?

[bbin]

I am being asked to enter the total NY 529 Contributions from 1998-2017. We rolled approx. $6k from another states 529 plan into the newly established NY 529 plan. Is that considered a contribution?

[MaryK1 · Accepted solution]

Yes, a rollover from another state's 529 is a contribution and can be deducted in New York.

For purposes of the subtraction modification under section 612(c)(32) of the Tax Law, the term contribution includes amounts transferred from another state’s 529 Plan and rolled over to a New York 529 Plan. This includes the earnings portion of the distribution from the other state’s 529 Plan not included in federal gross income pursuant to IRC section 529(c)(3)(C)(i) and the portion of the distribution considered an investment in the other state’s 529 Plan.

[bbin]

Thank you for your response.  We took a non qualifying withdrawal from a NY 529 in 2017. Why are they asking for contributions from 1998-2017?  Also, are they asking for contributions for all NY 529 plans or just the one we took the distribution from?

[MaryK1]

They want to contribution amount to determine the taxable amount, you do not have to pay tax on the contributions, just the earnings.  It would apply only to the one you withdrew from.

[bbin]

If I work through the steps on turbo tax it will actually brings up contributions to all 3 NY 529 plans and sums them by year. Should I make adjustments to those amounts of prior years to only reflect contributions to the plan we withdrew from?

[maglib]

<a rel="nofollow" target="_blank" href="https://www.tax.ny.gov/pdf/advisory_opinions/income/a05_7i.pdf">https://www.tax.ny.gov/pdf/advisory_... contributions rollover retains it status as nontaxable contribution for federal purposes.  In my opinion, it does not qualify for a new contribution for NY State purposes unless it was rolled within 60 days from the other state.  Please contact the NY Dept of Revenue. If you think logically, the money funded one state that you may have worked in and gotten a state tax credit in and then you rolled it into a NY Plan but it's not new monies in 2017, it just qualifies to maintain the 529 status as a rollover.

[maryrasa]

We did the same in Maryland.  Moved from a non state Coverdale ESA to Maryland 529.  Is that eligible for state deduction? 

[MarilynG1]

@maryrasa " Rollover contributions are deductible if not previously deducted."

Click this link for more info on Maryland 529 Plans.