If you contributed to the 529 plan, you will be able to claim a subtraction from income. If you withdrew money from your 529 plan, you may have to add the withdrawal back to your income if it was not used for educational purposes.
What is the 529 plan?
Its main purpose is to help families contend with the future high costs of their children’s or grandchildren’s college or vocational education.
What are the qualifications?
- Tuition, mandatory fees, books, supplies, and equipment required for enrollment;
- Certain room and board costs;
- Computers, computer software, Internet access and related services;
- And certain expenses for a special-needs student.
What are the deduction limits?
For Single filers $5,000 per year and $10,000 for Married Filing Jointly returns.
What about carryovers?
You can now rollover from 529 plans to Achieving a Better Life Experience (ABLE) accounts without incurring federal taxes up to the annual ABLE contribution limit. North Dakota allows for rollovers of College SAVE 529 assets to ABLE accounts without incurring North Dakota state taxes.
Effective January 1, 2024, 529 account owners will be able to rollover savings from their 529 plan account into a Roth IRA without incurring any federal income tax or penalty. The Roth IRA must belong to the same beneficiary, and the lifetime rollover limit is $35,000.
To be eligible, the 529 account must have been open for at least 15 years and the rollover amount must have been in the 529 account for 5 years. 529 to Roth IRA rollovers will also count toward annual Roth IRA contribution limits, but Roth IRA income limits do not apply for this type of contribution.
What if I don’t use it for education expenses ?
If a withdrawal is not used for a qualified education expense, it is subject to federal and state income taxes and a 10% federal penalty tax. Penalties only apply to non-qualified withdrawals, and only to earnings.
Where do I report it?
- State section
- Edit North Dakota return
- Begin on Subtractions from income
- College SAVE account deduction