Hi,
Last January, my wife and I were in the process of buying a house and needed to show "reserves" to satisfy the mortgage lender. The lender wouldn't honor funds that were in a 529 account, so we withdrew 75000 from one of the accounts I own (for my oldest daughter), then re-paid it in two chunks of 25000 and 50000 over the next 5 months, after closing on the new house.
Do I/we need to file the gift tax form? My inclination is "no", because we never intended it as a new gift, merely that we were putting back the money we borrowed from the 529 in the first place.
Thanks.
Side note -- we didn't have any tax obligation, as the basis for the account was greater than the account balance at the time of our withdrawal. (Investment earnings were negative to that point.) Hard to say whether that was good news or bad!