In 2024, I am going to add $18k into each of my 3 kids' 529 plans (for which I am the owner). My youngest is still in middle school and has a lot of time left to grow her balance, while my oldest is graduating college this year and we are about $20k shy of having enough to cover his final semester's tuition, fees, room and board. I am thinking about transferring $20k from the youngest's account to the oldest's this year, then withdraw it to cover the expenses. We live in PA, and the plans are with another state. PA allows state tax deductibility in 2024 of up to $18k per parent per beneficiary. If I do as I say above, would that in any way reduce the deductibility of the three $18k contributions? If anything, I am concerned PA might say that because I put $18k into the youngest's plan and then transferred $20k out, there is no deductibility at all for her account's contribution. I am having trouble finding this addressed in the state tax code. Thanks in advance!
PA DOR customer support and PA Treasury mention contributions with no mention of limitations based on withdrawals. Your withdrawal would be nontaxable since it is being used for qualified expenses. The rollover is just moving money, also a nontaxable event.
PA DOR customer support and PA Treasury mention contributions with no mention of limitations based on withdrawals. Your withdrawal would be nontaxable since it is being used for qualified expenses. The rollover is just moving money, also a nontaxable event.