New IRS notice impacting 529 plans
If you have recently received a refund of Qualified Expenses from an Eligible Educational Institution due to COVID-19, consider recontributing the proceeds back into your account in The Education Plan.
You may be able to avoid incurring federal income tax or the recapture of state income tax deductions claimed by yourself or other contributers to your account in prior tax years if:
- You recontribute the refund to a 529 account for which the beneficiary is the same as the beneficiary for whom the refund was received.
- The recontribution is made within 60 days of the date of the refund from the Eligible Educational Institution or July 15, 2020 whichever is later. This is an exception granted by IRS Notice 2020-23 for 2020.
* Please note: If you recontribute a refund, the original withdrawal and 1099-Q tax form will stay the same. You should consult a qualified tax advisor to determine any taxable amount.
Action to take:
The person to whom the check is made out should endorse the back of the check “payable to The Education Plan.” Then send the check along with a signed letter of instruction stating that you want the funds deposited into your account in The Education Plan as a recontribution of a previous qualified withdrawal. Checks and letters should be sent to:
The Education Plan
PO Box 219331
Kansas City, MO 64121-9331
If the refund check has already been cashed, you can still recontribute the amount of the refund into your account in The Education Plan. Please keep detailed records of the refund and recontribution for tax records.
It is also important to consider any potential state tax implications, so please consult a qualified tax advisor.
Should you have any questions, please call 1-877-337-5268, Monday through Friday, 8:00 a.m.– 7:00 p.m. MT, to talk to a client service representative. Thank you again for choosing The Education Plan as your partner in saving for education.
COVID-19 may negatively impact paper mail delivery. To help ensure timely transactions and communications regarding your account, we encourage you to transact via our secure online website and also select e-delivery of all documents.
If you already have online account access, you can change your delivery preferences by logging in to your account and selecting “Profile and Documents” and then “Delivery Preferences”.
If you would like to set up online account access click on “Login” at the top of the homepage and follow the instructions. You can set your delivery preferences during the set up.
If you need help, call our Customer Service line at 1 (877) 337-5268, Monday-Friday between 8:00 AM and 7:00 PM Mountain Time