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It's my understanding that one can avoid paying taxes on savings bond interest if the money from the bond is put into a 529 college savings plan. My question is about the apparent requirement that the bond owner be at least 24 when the bond was issued (found e.g. here.)

In 1992 my grandmother purchased a series EE savings bond for me. I was listed as the beneficiary. I was 8 years old.

The first requirement is that the bonds must have been issued after 1989 to a person who was at least 24 years old before the bond's issue date.

Was it "issued to" my grandmother, or to me?

It was also listed as payable-on-death to my father, who was over 24, if that makes any difference.

It just reached full maturity this month, so I have redeemed it. I'd like to put the money in a 529 plan for my son, aged 10. Currently I'm 38.

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I think you are mistaken about how you can avoid paying taxes on interest on EE savings bonds.

In order to avoid paying, you have to fill out IRS Form 8815

From General Instructions page 3 of Form 8815:

Who Can Take the Exclusion

You can take the exclusion if all four of the following apply.

  1. You cashed qualified U.S. savings bonds in 2021 that were issued after 1989.
  2. You paid qualified higher education expenses in 2021 for yourself, your spouse, or your dependents.
  3. Your filing status is any status except married filing separately.
  4. Your modified adjusted gross income (AGI) is less than: $98,200 if single, head of household, or qualifying widow(er); $154,800 if married filing jointly. See the instructions for line 9 to figure your modified AGI.

U.S. Savings Bonds That Qualify for Exclusion

To qualify for the exclusion, the bonds must be series EE or I U.S. savings bonds issued after 1989 in your name, or, if you are married, they may be issued in your name and your spouse’s name. Also, you must have been age 24 or older before the bonds were issued. A bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child.

So there are possible sticking points:

The first one is that the amount needs to be for the paid qualified higher education expenses amount. While normally this refers to tuition, as noted in the comments Qualified Tuition Plan (QTP) should be eligible, checking IRS Publication 970 (2021), Tax Benefits for Education section on Education Savings Bond Program

Qualified education expenses. These include the following items you pay for either yourself, your spouse, or a dependent.

  1. Tuition and fees required to enroll at or attend an eligible educational institution. Qualified education expenses don't include expenses for room and board or for courses involving sports, games, or hobbies that aren't part of a degree or certificate-granting program.
  2. Contributions to a qualified tuition program (QTP) (see How Much Can You Contribute in chapter 7).
  3. Contributions to a Coverdell education savings account (ESA) (see Contributions in chapter 6).

As 529s are QTPs, so this should be okay.

The second one is that the wording of the 1989 exclusion to me seems to be for bonds issued in the parent's name for the benefit of future children. As the bond is in your name, issued when you were 8, and a gift from your grandmother, I don't believe it would qualify.

Of course, depending on your state of residence there may be tax advantages to contributing to a 529 in your son's name.

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  • Several resources confirm putting savings bonds into a 529 plan for future expenses are qualified education expenses for this year, e.g. savingforcollege.com/article/… or dwdcpa.com/resources/insights/… Apr 10 at 2:08
  • I am afraid you are right that it won't qualify because I was eight when it was issued. On the other hand, the bond is "issued in the parent's name for the benefit of future children" so I seem to fulfill the intent of this rule, if it's to prevent using the tax benefits for your own education instead of the children's. Apr 10 at 2:10
  • @NickMatteo Thanks for the correction, checked IRS Pub 970 and updated answer. My guess is to avoid some other advantage by grandparents, as you could have bought the bond at 24 yrs for yourself and sold it when 34 yrs to pay for grad school/other degree. Given that a number of 529 plans allows for non-related people to contribute to a beneficiary this may just be some legacy law/tax code prior to mid/late 1990s when 529 became available. Apr 10 at 3:11

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