Skip to main content
No. of Recommendations: 1
Thanks, all. I appreciate both the references and the suggestions. This has been very helpful. Now I need to go see what the date of the check was to see if I'm past the 60 day point or not. If I'm not, I'm fairly close. I also wonder whether a required accompanist ($20 per session) for her voice lessons counts as a school-related expense. That's about the only other thing I can think of that might use up some of those funds. Sadly, the marching band and color guard expenses definitely don't count or we would not be having this conversation.

ThyPeace, if the accompanist counts, that'll use up the rest of the funds.
Print the post Back To Top
No. of Recommendations: 2
Since you took the distribution in good faith to pay for DD's college costs, I don't think there's anything specific you need to do with it, especially since the amount will come out to just a couple hundred dollars. I guess you could return it to the 529 in the form of a contribution, or you could just set it aside and have it ready for the inevitable unexpected college expense that will surely arrive as the sun rises in the morning.

Fuskie
Who could be wrong but thinks you may be overthinking things over an inconsequential amount of money...

-----
Premium Home Fool: Ask me a Foolish Question, I'll give you a Foolish Response!
Ticker Guide: The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME), MongoDB (MDB), Trip Advisor (TRIP), Vivendi SA (VIVHY), Mimecast (MIME), Virgin Galactic (SPCE), Axon Technologies (AXON), 51Jobs (JOBS)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disassociation: The views and statements of this post are Fuskie's and are not intended to represent those of The Motley Fool or any other sane body
Disclosure: May own shares of some, many or all of the companies mentioned in this post: https://tinyurl.com/FuskieDisclosure
Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx
Invitation: You are invited to interactively watch Motley Fool Live online television: https://www.fool.com/premium/live/
Call to Action: If you like this or any other post, Rec it. Better yet, reply to it. Even better, start your own thread. This is YOUR TMF Community!
Print the post Back To Top
No. of Recommendations: 5
https://www.savingforcollege.com/article/avoid-these-529-wit...

It's a couple of years old but I suspect he would have updated it if it needed to be.

There's also this :
https://www.savingforcollege.com/article/what-you-can-pay-fo...
Print the post Back To Top
No. of Recommendations: 3
https://www.savingforcollege.com/article/can-i-recontribute-...

If the beneficiary or account owner of a 529 plan receives a refund of qualified higher education expenses from the college or university that were paid for with a 529 plan distribution, the refund can be recontributed to the 529 plan within 60 days of the date of the refund without having to pay any taxes and penalties on the distribution.

The amount of the recontribution cannot exceed the refunded amount. Otherwise, any excess amount will be considered to be a new contribution, not a recontribution.
Print the post Back To Top
No. of Recommendations: 2
This is a tax question and I suggest you post over on the tax board. My understanding is you have two options. You can redeposit the funds within a certain time period after getting the refund. Or you can take it as a non-qualified distribution and pay taxes and penalties.

Also, be aware that you can't use the same expenses for 529 and for things like the American Opportunity Credit. Again, the tax board is the place to go.
Print the post Back To Top
No. of Recommendations: 2
My feeling is that when you are only talking about a couple hundred dollars, what might be a tax question is not really a taxing question.

Fuskie
Who notes you're talking about a $20 add to your tax liability compared to a bunch of work to return the funds, so really, the question is how much effort you want to put into it...

-----
Premium Home Fool: Ask me a Foolish Question, I'll give you a Foolish Response!
Ticker Guide: The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME), MongoDB (MDB), Trip Advisor (TRIP), Vivendi SA (VIVHY), Mimecast (MIME), Virgin Galactic (SPCE), Axon Technologies (AXON), 51Jobs (JOBS)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disassociation: The views and statements of this post are Fuskie's and are not intended to represent those of The Motley Fool or any other sane body
Disclosure: May own shares of some, many or all of the companies mentioned in this post: https://tinyurl.com/FuskieDisclosure
Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx
Invitation: You are invited to interactively watch Motley Fool Live online television: https://www.fool.com/premium/live/
Call to Action: If you like this or any other post, Rec it. Better yet, reply to it. Even better, start your own thread. This is YOUR TMF Community!
Print the post Back To Top
No. of Recommendations: 4
Who notes you're talking about a $20 add to your tax liability compared to a bunch of work to return the funds, so really, the question is how much effort you want to put into it...

Well, the penalty is 10%, on about half of $586, so we'll say $300 for a $30 penalty. But since the original withdrawal would have been tax-free, there's also a tax liability at the OP's marginal bracket. If the OP is in the 24% bracket, that's $72 for a total of $102 - so it might be worth a bit more time. That assumes that (1) the 60 day limit for a rollover hasn't already passed and the OP hadn't already done a non-trustee rollover for the 529 in the past 12 months.

That said - if the school allows it, it would be cheaper to prepay $300 worth of 2022 costs (which is allowed), so that the withdrawal year matches the year the costs were paid. That avoids the taxes and the penalties altogether.

AJ
Print the post Back To Top
No. of Recommendations: 1
Who notes you're talking about a $20 add to your tax liability compared to a bunch of work to return the funds, so really, the question is how much effort you want to put into it...

There is also the possibility of state penalties along with state and federal income taxes.
Print the post Back To Top
No. of Recommendations: 1
Thanks, all. I appreciate both the references and the suggestions. This has been very helpful. Now I need to go see what the date of the check was to see if I'm past the 60 day point or not. If I'm not, I'm fairly close. I also wonder whether a required accompanist ($20 per session) for her voice lessons counts as a school-related expense. That's about the only other thing I can think of that might use up some of those funds. Sadly, the marching band and color guard expenses definitely don't count or we would not be having this conversation.

ThyPeace, if the accompanist counts, that'll use up the rest of the funds.
Print the post Back To Top