I set up a 529 account that is based in NY state. it made sense at the time. I now would like to close the account but not for education purposes. Will withdrawing the money require me to file a NY state tax return? If so, it is possible to roll the money into another state's plan? and would that require a NY state tax return?
I hope this makes sense.
thanks.
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So I would strongly encourage a 529 plan to 529 plan rollover. Funds can be rolled over from one 529 plan to another once per year for the same beneficiary. Funds can also be rolled over at any time for a different beneficiary who is a family member of the previous beneficiary.
Now to the question of New York taxes. A rollover of assets from your NY's 529 College Savings Program account to a 529 plan in another state is subject to New York State income tax on earnings, as well as the "recapture" of New York State tax deductions previously taken.
Under New York State law distributions for K-12 tuition, rollovers to a beneficiary's Roth IRA account, and qualified education loan repayments are also considered nonqualified withdrawals and will require the recapture of any New York State tax benefits that have accrued on contributions
Thank you for the opportunity to answer your questions @ppalm
All the best,
Marc T.
TurboTax Live Tax Expert
So I would strongly encourage a 529 plan to 529 plan rollover. Funds can be rolled over from one 529 plan to another once per year for the same beneficiary. Funds can also be rolled over at any time for a different beneficiary who is a family member of the previous beneficiary.
Now to the question of New York taxes. A rollover of assets from your NY's 529 College Savings Program account to a 529 plan in another state is subject to New York State income tax on earnings, as well as the "recapture" of New York State tax deductions previously taken.
Under New York State law distributions for K-12 tuition, rollovers to a beneficiary's Roth IRA account, and qualified education loan repayments are also considered nonqualified withdrawals and will require the recapture of any New York State tax benefits that have accrued on contributions
Thank you for the opportunity to answer your questions @ppalm
All the best,
Marc T.
TurboTax Live Tax Expert
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