529 can now be used to repay student loans

rsinj 2019-12-23 21:59:03 UTC #1

$10,000 lifetime limit that applies to the beneficiary and each of their siblings.

mark 2019-12-24 14:10:20 UTC #2

Some questions about this:
1) Can I take a qualified 529 distribution right now, in 2019, to repay myself for a loan payment earlier this year?

2) Are loan repayments from a 529 subject to recapture under state laws (meaning I have to pay back any state tax deduction I got on that money)? (I live in NY)

3) It was always my understanding that qualified payments and 529 withdrawals need to be done the same year. Would that still be true? I would assume that means that for any loan repayments for 2019, they would need to be made before the end of this year.

I understand so much about this will be coming out in the near future. Just don't want to miss an opportunity before the end of the year.

Thoughts?

mark 2020-01-06 22:53:49 UTC #3

Some updates/comments on my questions:
1) I think the answer was yes. I did take the distribution.
2) They could be subject to recapture. NY currently has a blurb on it's 529 website that says no decision has yet been made. They do recapture for withdrawals used for K-12.
3) On another web board I saw some comments made that this would still be true.