These tax places stay messing up the bank info I swear 🤦‍♀️

Call JH customer service and get a tracking number for the check. They can usually provide that

5 The 5-year election for 529 plans is great, but don't forget about potential state tax benefits that might make annual contributions more advantageous. In my state, we get a deduction for up to $10k in 529 contributions per beneficiary each year. So sometimes it makes sense to do a hybrid approach - some upfront and some spread out.

This is such a helpful thread! I'm in a similar situation with some inheritance money and have been paralyzed by all the options. A few questions for the group: 1. If I do the 5-year 529 election now, am I locked out of making any gifts to my kids for other purposes (like helping with a first car, etc.) during those 5 years without using my lifetime exemption? 2. Has anyone dealt with the situation where you want to contribute to both a 529 AND a UTMA? Like maybe $90k to the 529 with the 5-year election and then smaller amounts to a UTMA for more flexible spending? 3. For those mentioning state tax benefits - do you know if the deduction applies in the year you make the lump sum contribution, or does it get spread out over the 5 years when you elect the gift tax averaging? The inheritance feels like such an opportunity but I don't want to mess this up by not understanding all the rules!

My parents set up trusts for all us kids and I just went through this exact situation last year! My biggest piece of advice: GET EVERYTHING IN WRITING from the trustee about your options. My trustee also initially said everything needed to be liquidated, but when I pushed back (politely but firmly), suddenly there were other options available. Also, don't underestimate the psychological impact of suddenly having access to $250k. I'd strongly recommend working with a fee-only financial planner before making any decisions. The $1-2k you might spend on professional help could save you tens of thousands in taxes and poor investment choices.

I went through a similar trust situation two years ago and learned some hard lessons that might help you! First, absolutely get a copy of your trust document and read through the distribution provisions carefully - many trustees don't explain all your options upfront. The key question is whether your trust allows "in-kind" distributions. If it does, you can potentially receive the actual investments rather than cash, which avoids triggering capital gains within the trust. This saved me about $8,000 in my situation. Also, don't be afraid to ask your trustee pointed questions about WHY they're choosing liquidation over other options. Sometimes they default to the easiest administrative path rather than what's best for you tax-wise. Remember, they have a fiduciary duty to act in YOUR best interest, not their convenience. I'd definitely recommend getting your own tax professional involved - even just a consultation can help you understand your rights and options. The trustee works for the trust, not specifically for you, so having independent advice was invaluable for me. One more thing: if you don't need the money immediately, ask about partial distributions over time rather than a lump sum. This can sometimes provide more tax flexibility depending on your situation.

To clarify what others have said: think of the 846 date like shipping a package, and the processing date like when the paperwork for that shipment is completed. The package (your refund) is already on its way as of the 846 date, even though the shipper (IRS) is still finishing their internal paperwork until the processing date. Did you file with direct deposit or are you expecting a paper check? That makes a big difference in timing.

I've been through this exact same confusion! Had my 846 date show 2/15/24 with processing date of 3/2/24 and was pulling my hair out trying to understand what was happening. The good news is that in my case, the money showed up in my account exactly 3 business days after the 846 date, even though the processing date was still weeks away. From what I've learned, the 846 date is basically when the IRS cuts the check or initiates the direct deposit. The processing date is just when they finish all their internal bookkeeping and close your file completely. It's like ordering something online - the item ships on one date (846) but the order isn't marked "complete" in their system until later (processing date). Since your 846 date was 2/22/24, I'd definitely check your bank account and maybe call your bank to see if there's a pending deposit. Sometimes it takes a few days to show up depending on your bank's processing times. If it's been more than a week since 2/22 and still nothing, that's when I'd start making some calls to figure out what's going on.

One thing to watch out for - make sure you're only counting actual scholarships and not loans! I almost made this mistake. My son had what the school called a "tuition award package" that included both scholarships and subsidized loans. Only the scholarship portion qualifies for the penalty exception. Also, keep really good records. I had to go through an IRS verification process last year, and they wanted documentation showing the scholarship amounts for each year, plus proof of the 529 withdrawal purpose. Better to have too much documentation than not enough!

This is such great information! I'm actually in a very similar boat - my son graduated in 2021 and we still have about $15,000 sitting in his 529 from various merit scholarships he received. I had no idea we could withdraw penalty-free based on scholarship amounts until I stumbled across this thread. One question though - if I withdraw now in 2023, do I report this on my 2023 tax return even though the scholarships were from 2018-2021? And do I need to break down which scholarship amounts came from which years, or can I just total them all up as long as I don't exceed the total scholarship amount received? Really wish I had known about this sooner, but better late than never! Thanks everyone for sharing your experiences.