Hi
Do people use 529 accounts for college deposits when their kid is accepted to a college?
I know that the payment and 529 distribution should be in the same calendar year. So if I pay the deposit in Dec 2021, I should take the money out from 529 account this month too.
However, my kid won’t be in college until September 2022 and I have no idea whether 1098-T is generated for deposits. Is that even a problem?
Is it better to wait till January to pay the deposit?
Well, a “deposit” is not an “expense” - it’s a payment towards an expected, future tuition bill.
If it’s all the same to you, I would keep it simple and take it out in January - this way the 529 withdrawals for 2022 (including the balance paid later in the year) will neatly match the college bills for 2022.
I also recommend waiting until after January 1 to keep it simple, unless there is an ED commitment deadline before. I don’t know whether you’d get a 1098-T to match the 1099-Q for a deposit payment. It’s easier just to not need to find out.
I waited every year, with the increasingly urgent “your tuition bill is due January 5! Without payment, a student won’t be enrolled” messages.
Actually, for spring semesters that shouldn’t be an issue. You absolutely can pay your spring semester in November or whenever the invoice comes out. Your withdrawals will match invoices, and the college is required to show the amounts received that calendar year.
In fact, I usually kept close to one semester in money market in case of a down-turn, but then paid the spring semester in whatever week the stock market seemed favorable to “sell high”.
You can. I didn’t say you can’t.
I stand by waiting to keep it simple.