How to use Savings Bonds to Fund 529

Using US savings bonds to fund 529 plans for higher education has many benefits. In the next section, Use U.S. savings bonds for 529 plans, we discuss more of how to use savings bonds to fund 529 plans.

If you are interested in rollover over US savings bonds tax free, you should know how to use savings bonds to fund 529 plans properly.

First of all a 529 plan is used for qualified higher education expenses. The owner of the US savings bonds can redeem the savings bonds and roll the proceed over into a 529 plan to use for qualified educational expenses.

Opening a 529 account

You need to open a 529 account at a financial institution before you rollover the US savings bonds. You need to fill out a US savings bonds rollover form which can usually be done at the same time as opening a 529 account.

Tell the IRS - file the IRS form 8815

When the owner of a US saving bond redeem the saving bond and transfer the proceed into a 529 plan, the owner of the US savings bond must file IRS tax form 8815 to exclude the US savings bond interest from taxation.