In this situation, I don’t take out money but just transfer from one state (A) plan to another (B), do I need to pay state-tax to State (A)? If I don’t, I can find any state plan and transfer the money to the state where my kid’s college is later.
If I transfer my 529 plan from one state to another, do I need to pay state tax?
02
Jul
HeartlessClown
July 2, 2012 at 3:45 pm
no. The 529 plan is a tax free product.
To Retail or Not to Retail
July 2, 2012 at 4:25 pm
As long as is transferred to another state’s plan, it is not taxable.
Steve
July 2, 2012 at 4:30 pm
Transferring from one states 529 plan to another is a non-taxable event. The only reason that I can think of to do this is because you are unhappy with the investment choices or the returns. There is no benefit to having the plan in the state where your child goes to school. Depending upon the state that you live in, there may not be any state tax owed when the money is withdrawn if your 529 is in that states plan. I would advise you to consult a financial advisor.