My state allows an above the line deduction for 529 plan contributions. There is no state tax deduction for tuition payments. It seems like my best course of action is to continue to fund the plan even if payments are going to immediately come out of it. Is this the best course of action?
529 Contribution While Child Is In College?
byu/jstar77 inpersonalfinance
Posted by jstar77
3 Comments
yup, fund the 529 for as long as you can. there are no time restrictions on how long money has to sit before using on school expenses.
so if you have 50k cash, and tuition is 50k………deposit 50k into the 529, take whatever state tax write off; and immidiatly use the 529 to pay for school
What state are you in? The rules vary by state and you may or may not be permitted to immediately withdraw a new contribution. The other commenter is mistaken.
Yep, you got it. My state gives a tax credit for contributions. When I was in grad school I would put the money in the 529, pull it right back out, get the $1,000 tax credit when I filed my taxes, and put right back towards my next tuition bill.