529 Plan Rollover Details
According to federal law, you are entitled to one tax-free 529 rollover within a 12-month period per beneficiary. It’s important to note that this rule is per beneficiary, not per plan. If your beneficiary has multiple accounts open for him or her, you will need to coordinate with the other account owners to ensure that only one rollover takes place in a 12-month period.
For example, if you have a 529 account for your daughter, and her grandparents have a separate account in a separate state’s plan for her, you will need to make sure they have not completed a rollover in the last 12 months before you complete yours.
There are two ways to perform a 529 plan rollover:
1. If you want to roll funds over into an existing or new account with The Education Plan, you can easily complete it by logging into your account and selecting “Rollover from another 529” from the drop down menu. Or you can fill out this rollover form.
2. If you prefer, you can also handle the rollover yourself by requesting a distribution from your old 529 plan and then redepositing that amount into your account with The Education Plan.
Regardless of who does it, the rollover must be completed within 60 days or the funds will be considered non-qualified and taxed accordingly.
If you violate any of the regulations, including rolling over more than once in a 12-month period or not respecting the 60-day time limit, the funds can be considered unqualified contributions, and you may have to pay state and federal income taxes, plus a 10% federal income tax penalty on earnings.