I'm facing a grad school tuition bill of $20K due in 15 days and have a 529 plan strategy I’d like some advice on.
In 2024, I contributed $10K to my 529 for tax benefits and added another $8K in January 2025, leaving me with $18K available even though I need $20K to cover tuition.
I have two potential routes to close the gap:
- The first option is to withdraw the $18K from my 529 as an eligible educational expense, then supplement the remaining $2K from another source to write a $20K check to the university.
- The second option involves depositing an extra $2K into the 529 so that I meet the $10K annual contribution threshold and secure the tax benefit for 2025, allowing that contribution to register for a day before withdrawing the full $20K to pay the tuition.
My main concerns center on the second option: would temporarily boosting the 529 with an extra $2K and then withdrawing it to pay tuition potentially trigger any audit issues, given that the money ends up in my bank account first, and is this approach completely above board despite feeling like a loophole? I’d appreciate any insights or shared experiences that might help clarify the potential risks or benefits of these options. might have missed. Thanks in advance!