Can I gift the 529 college plan to my son who will not attend college or vocation school? Or, can I take the distribution and set up an IRA?

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The account has about $17000. Do I get taxed on earnings only. Am I taxed on the Distribution?

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George4TacksAnswer

Level 15

If it it YOUR 529, then you can take the distribution. The earnings are taxable and subject to a 10% penalty. You can then do anything you want with it, including gifting to me, as well as your son. You can NOT convert it to an IRA. You can use the money to add to an IRA, assuming you meet all the qualifications for an IRA.

Add https://www.irs.gov/pub/irs-pdf/p970.pdf to your reading list.

Answers are easy. Questions are hard!

George4TacksAnswer

Level 15

If it it YOUR 529, then you can take the distribution. The earnings are taxable and subject to a 10% penalty. You can then do anything you want with it, including gifting to me, as well as your son. You can NOT convert it to an IRA. You can use the money to add to an IRA, assuming you meet all the qualifications for an IRA.

Add https://www.irs.gov/pub/irs-pdf/p970.pdf to your reading list.

Answers are easy. Questions are hard!