Time for a Friday Flight- our little sampling of the week’s financial news and what it means for your personal finances. There are a lot of headlines out there, but we boil them down to specific takeaways that will allow you to kick off the weekend informed and help you to get ahead with your money. In this episode we explain some relevant and helpful stories like: rock the vote, the long-awaited Fed rate cut, eliminating bad debt, rich renters, 15 year mortgages, 529 milestones, bribing kids to read, who keeps the $70,000 engagement ring, expensive therapy, dumbphones and work-life balance, returning to the office, the new Amazon Saver line, and costly coffee.
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This is actually for Episode 883, but that one isn’t posted here yet. I was very surprised to hear that you can add and withdraw money to a 529 plan with little turnaround because I could have sworn I couldn’t do that last year when we expected my daughter to start college. As I discovered, this ability is state-specific. 4 states–including Wisconsin where I live–have holding periods. In WI, it’s 365 days. Thus, you cannot deposit, withdraw, and get a tax break unless that withdrawal is at least 365 days later. “365-Day Rule: Withdrawals taken within 365 of being contributed to an account must be added to Wisconsin income to the extent the contribution was previously deducted from Wisconsin income. Any amount withdrawn within 365 days of being contributed to the account must be added back to income or reduce available carry-over.” https://dfi.wi.gov/Pages/EducationalServices/CollegeSavingsCareerPlanning/CollegeSavingsProgram.aspx
I encourage you in the future to stress that 529 plans can be very state-specific with some of their rules because this one, in particular, could significantly harm someone at tax time.
I do love the show!
Thanks for sharing that, AnnMarie. Great point. We’ll be sure to stress that in the future when talking about 529 plans!