529 Plan Rhode Island
January 13th, 2006
Question: What does this mean in relation to a 529 Plan?
The principal portion of rollovers and nonqualified withdrawals from this plan within two taxable years of the contribution are included in Rhode Island taxable income to the extent of prior Rhode Island tax deductions. I am trying to figure out if I can deduct what I contributed for my child. Thanks.
Answer: What this is saying is that if you take a non-qualified withdrawal or roll your funds over to another 529 program and you took the state tax deduction, you’ll have to add the amount you deducted back into your taxable income in the year you took the withdrawal. Looks like this only applies for the 2 yrs after you made the contribution and took the deduction.
So, if you made a contribution during 2008, you can take the tax deduction. If, however, you take a non-qualified withdrawal or rollover to another 529 Plan within the next 2 years, the amount you took as a deduction would be added back to your adjusted gross income. They’re basically rescending the tax deduction if you rollover or take a non-qualified withdrawal within 2 years.
529 Bellevue Avenue- Newport, RI – presented by Lila Delman Real Estate
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