What are holding periods?
Holding periods are restrictions established by some states which require that your money stay in a state’s 529 plan for a determined amount of time before withdrawals can be made. The holding periods range from 1 – 3 years and are state specific. The purpose of the holding period is to discourage individuals from receiving a state tax deduction from their state and the rolling the money into another plan. Individuals should know that if tax savings are received and then the money is rolled into another plan prior to the holding period ending, you will receive a bill from your state for that tax savings.
