Utah Educational Savings Plan

New law makes it easier to put refunds from schools back in your 529

Congress allows a 60-day window to recontribute funds

A new law gives 529 account owners a 60-day window to recontribute refunds from eligible higher education institutions to their accounts.

Congress gave final approval on December 18, 2015, to the Protecting Americans from Tax Hikes (PATH) Act of 2015, which included provisions that impacted 529 plans. President Barack Obama signed the bill into law the same day. 

Under the new lawaccount owners have 60 days from the date of the refund to redeposit the refund of qualified higher education expenses into the same 529 account from which the money was withdrawnFor example, if a beneficiary receives a refund from an eligible educational institution because he or she withdrew from school due to an illness or other unforeseen circumstance, the refund may be returned to the beneficiary’s 529 account and would not be deemed a nonqualified withdrawal or be subject to any taxes or tax penalties. 

The recontribution cannot exceed the amount of the refund.

It is recommended that account owners keep a receipt of refunds in order to have documentation of the amount of the refund and the date it was issued.