Do 60-Day Rollovers of a 529 Plan Count as Income on the FAFSA?
Facebook icon Twitter icon Print icon Email icon

By Mark Kantrowitz

September 3, 2020

A rollover from one 529 plan to another 529 plan is tax-free and does not count as income on the Free Application for Federal Student Aid (FAFSA). This includes a distribution that is deposited in another 529 plan within 60 days of the distribution.

The rollover may be to a 529 plan for the same beneficiary or for a new beneficiary who is a member of the family of the old beneficiary. If the rollover is for the same beneficiary, rollovers are limited to one rollover per 12-month period. 

See also: 5 Things to Consider Before Doing a 529 Plan Rollover

Limitations on Rollovers

Any additional rollovers for the same beneficiary per 12-month period will be considered to be a non-qualified distribution

If the new beneficiary is not a member of the family of the old beneficiary, the rollover will be considered to be a non-qualified distribution.

The earnings portion of a non-qualified distribution is considered to be a taxable distribution and is reported as income on the FAFSA.

See also: Can I Do a Partial 529 Plan Rollover?

Rollovers to Same-State and Out-of-State 529 Plans

Some states consider a transfer from one 529 plan in the state to another 529 plan in the same state to be an investment change and not a rollover. 

Some states consider an outbound rollover to an out-of-state 529 plan to be a non-qualified distribution. The earnings portion of an outbound rollover may be subject to state income tax and recapture of state income tax benefits, but is still considered to be tax-free at the federal level. The rollover is not reported as income on the FAFSA. 

See also: How to Switch 529 Plans

Rollovers to an Able Account

A rollover from a 529 plan to an ABLE account is not considered a taxable distribution and will not be reported as income on the FAFSA. However, rollovers from 529 plans to an ABLE account for a beneficiary, in combination with other contributions to the ABLE account, are limited to the annual gift tax exclusion amount ($15,000 in 2020). Any contributions beyond this limit will be considered to be a non-qualified distribution.

See also:

A good place to start:

See the best 529 plans, personalized for you