Use U. S. savings bonds for 529 plan

Use U. S. Savings Bonds for 529 Plan

August 11th, 2009

How to use U. S. Savings Bonds to Fund a 529 plan

For qualified U. S. Savings Bonds issued after 1989, interest accrued may be federal income tax exempt, if the U. S. savings bond is redeemed to pay qualified higher education expenses.

For purposes of this tax exclusion, qualified higher education expenses include tuition, Contributions to 529 Plans and expenses for certain fees.

In order for you to benefit from the U. S. Savings Bonds tax exemption, make sure you complete each of these steps:

An eligible owner redeems the qualified U.S. Savings Bonds.
Complete the Higher Education 529 Fund Enrollment Form AND a Transfer / Rollover Form.
Include the proceeds from the U. S. savings bond redemption on required forms.
The owner of the U. S. savings bond is required to file IRS Form 8815 to exclude the savings bond interest from taxation.

Note:

Redemption and the deposit of the savings bond redemption proceeds into a Higher Education 529 Fund must occur within the same calendar year.

US Savings Bonds