Avoid taxes on your refund for qualified 529 expenses by recontributing it by July 15th.
Campuses are closed. Classes have been disrupted. Future plans are on hold. Still, there may be a silver lining of Covid 19, as you may have received a refund for qualified 529 expenses. If you did, consider recontributing it to your CollegeChoice account by July 15, 2020 to save on taxes and penalties.

Put your student’s refund back to work
According to CollegeChoice 529, if your beneficiary received a refund of qualified expenses from an eligible educational institution, consider re-contributing the proceeds into their CollegeChoice 529 account so that the savings can be used for future qualified expenses.

You can re-contribute a 529 account refund for money paid for qualified expenses back into the same or another 529 account and avoid incurring both federal and Indiana income tax or the recapture of the Indiana state income tax credit if:

  • You re-contribute the refund to the student’s qualified tuition program account; and
  • The re-contribution is made within 60 days of the date of the refund from the eligible educational institution or July 15, 2020, whichever date is later.

Here’s what to do once your student receives a refund:

  • Endorse the back of the check “payable to CollegeChoice 529.”
  • Send in the check along with a signed letter of instruction stating that you want the funds deposited back into the student’s CollegeChoice 529 account as a re-contribution of a previous qualified withdrawal.
  • If you have already cashed the check, you can still re-contribute the amount into the student’s CollegeChoice 529 account. Please keep detailed records of all refund information for your taxes.

Please contact your Somerset advisor at 317-472-2200 or with any questions.