When my daughter was born in 1995, we setup an investment account and made a one-time investment of $10,000 across several mutual funds. The goal was to save for her education. Today, there is about $20,000 in the account. I have also setup a 529 account in my state
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Here is my question: Given that:
1) the 529 is funded with post-tax dollars, and
2) these dollars grow tax-deferred, and
3) distributions used to pay for qualified higher education expenses are tax-free, then: is there some way to move the balance from my investment account w/o paying taxes on the gains (since these gains would have been tax- deferred in a 529)? You'd think so, since non-qualified distributions get taxed AND penalized. Your input and advice is appreciated,
Chris
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