Are you one of the many families who received a refund from your child’s higher education institution as school campuses closed for COVID-19 safety protocols? Some schools are issuing refunds for housing, dining services, and other mandatory fees.
You can place the refund back into your Ohio 529 account if you took a withdrawal from the account to cover these qualified costs. When you send in the refund check, you must include a signed letter stating that this is a re-contribution due to a school refund, the account number from which the original 529 withdrawal was made as well as the initial date of the withdrawal, and the date that you received the refund from the school. You need to keep a copy of your letter in the event that you are audited by the IRS. Again all re-contributions must be made within 60 days of refund check date.
When you add the refund back to your Ohio CollegeAdvantage 529 account, it is coded as a regular contribution as the money will be added as 100% principal.
As the refund is really a re-contribution of your original 529 withdrawal, it cannot be counted towards your state of Ohio tax deduction. With this refund, you are returning dollars that has already been counted towards prior state income deductions. When you start working on your 2020 taxes next year, you will need to subtract the amount of the refund from your contribution total for this year. As a reminder, you should keep your copies of bank statements and/or cashed checks for verification of your contributions to Ohio’s 529 Plan. This is also includes the refund check.
Even though the refund check is a re-contribution of your original 529 withdrawal, you will still receive a 1099Q for the original withdrawal. The 1099Q will NOT be adjusted because of the re-contribution. This is the reason why you must keep detailed records, including a copy of the refund check, a copy of the letter for the reason for the refund, and a copy of re-contribution check, which was deposited within 60 days of its receipt. If you decided to utilize the refund (rather than re-contribute it) for upcoming qualified higher educational expenses during the calendar year, then you will need to keep those detailed receipts as well.
If you have account-specific questions regarding how to recontribute a refund to your 529 plan, please email firstname.lastname@example.org with your inquiry, as well as a good daytime contact number and the best time of day to reach you. Or you can call the Customer Service department at 1-800-AFFORD-IT (1-800-233-6734) between 8:30 a.m. – 6 p.m. ET on Monday-Friday.
Explore Ohio’s 529 Plan —The Plan That Can — at CollegeAdvantage.