OK529 Superfunding --> Rollover

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
dangerhighvoltage
Posts: 14
Joined: Sat Dec 28, 2019 4:44 pm

OK529 Superfunding --> Rollover

Post by dangerhighvoltage » Mon Jan 13, 2020 11:06 pm

I recently pulled $100k out of a bad investment choice, and now want to invest that into two 529 plans for my kids, aged 10 and 13.

Oklahoma has a 5% state tax, so I would get a $1,000 tax advantage by contributing up to $20k per year (married filing jointly). From what I understand, I can contribute up to $100k at once, and over 5 years, get that $1,000/yr tax advantage.

The fees are higher than I'd like for the OK529, but not high enough to go out of state. I believe, that I can still contribute into 2019, this year, and now this leads me to my questions.

If I want to put $50k in each account, and eventually move it to say, NV529, would it make sense to make a $20k contribution in 2019 to Kid A account, then another $30k contribution in 2020 to Kid A account, and then a $50k contribution in 2020 to Kid B account? Could I then move both accounts, 100% to NV529 4 years and a day after my 2019 contribution (say that was today, 01/13/2020, so on 01/14/2024), or do I have to wait exactly 5 years from the actual DATE of the deposit, which would be 01/14/2025?

Does it even make sense to move it at this point in time anyway, if the 13 year old will be 17/18, and the 10 year old will be 14/15?

lakpr
Posts: 3403
Joined: Fri Mar 18, 2011 9:59 am

Re: OK529 Superfunding --> Rollover

Post by lakpr » Tue Jan 14, 2020 10:09 am

Most states that provide a state tax break for investing in their 529 plans, recapture the tax if you roll the 529 plan to another state's plan and do not use it for kids education. Please check your state (Oklahoma) tax laws.

Based on this statement
dangerhighvoltage wrote:
Mon Jan 13, 2020 11:06 pm
The fees are higher than I'd like for the OK529, but not high enough to go out of state.
I would not bother to look elsewhere. Any future money that you wish to earmark for your kids education can be contributed into Nevada plan if you so wish, but this $100k, I'd just invest in OK529 plan and not look back.

Topic Author
dangerhighvoltage
Posts: 14
Joined: Sat Dec 28, 2019 4:44 pm

Re: OK529 Superfunding --> Rollover

Post by dangerhighvoltage » Wed Jan 15, 2020 2:50 pm

lakpr wrote:
Tue Jan 14, 2020 10:09 am
Most states that provide a state tax break for investing in their 529 plans, recapture the tax if you roll the 529 plan to another state's plan and do not use it for kids education. Please check your state (Oklahoma) tax laws.

Based on this statement
dangerhighvoltage wrote:
Mon Jan 13, 2020 11:06 pm
The fees are higher than I'd like for the OK529, but not high enough to go out of state.
I would not bother to look elsewhere. Any future money that you wish to earmark for your kids education can be contributed into Nevada plan if you so wish, but this $100k, I'd just invest in OK529 plan and not look back.
Thanks for the feedback. And you are right about the recapture on the tax break. From the looks of it, there is no way to designate a 2019 deposit, you just have up until that current tax year due date (April 2020) to say "yes, part of that 2020 deposit was for 2019," so it looks like I would have to wait 5 years from the date of the deposit to move it into another state's plan, which would be Jan/2025, and she will start college in Aug of that year. I may go ahead and move them both at that time, just so they are in the same plan, and can take advantage of the lower costs at least for a few years for the younger one, and a few years on the older one while she is actually in college.

Went ahead and opened the OK529 plan yesterday!

Post Reply