529 Plan Tax Breaks?

If you delayed in contributing to a 529 plan, you may still be able to get a state tax credit or deduction for money you deposit into the account. In many of the states that offer a tax credit or deduction, there is no minimum amount of time that the money has to be in the account. You can simply put money into the 529 plan one week, and then withdraw it the next week to pay for your student’s tuition. This was discussed in a column by Ron Lieber in the New York Times – http://bucks.blogs.nytimes.com/2011/02/28/a-tax-trick-for-529-college-savings-accounts/

It’s important to check with the rules for your state or whichever state’s 529 plan you contribute to because they may differ. Other relatives may also be able to take advantage of this if they add money to your child’s account. Note that there may be limits on how much of the money in the account qualifies for a deduction.