Using Savings Bonds to Fund 529

Using savings bonds to find 529 plans or other college savings plans has become more and more popular among US savings bonds owners. This is because rollover over US savings bonds into a 529 plan or Coverdell educational savings account is tax free.

The benefits of using savings bonds to fund 529 plans

Once the US savings bonds have reached their maturity dates, redemption is a taxable event. However, if the owner of the US savings bonds redeem the bonds to pay for qualified higher educational expenses, he or she will not have to pay taxes for that amount. An alternative is to rollover the US savings bonds into a 529 plan or an educational IRA.

Rules for using savings bonds to fund 529 plans

There are rules to follow for using savings bonds to fund 529 plans. First of all the owner of the US savings bond must be 24 years old or older before the issue date of the US savings bond. There is also the adjusted gross income requirement which is indexed annually for inflation.

• Savings Bonds for Education
• Use U. S. savings bonds for 529 plan
• Coverdell Education Savings Account
• Series EE Savings Bonds