Hello,

I understand you specialize in IRAs, but you were highly recommended by a financial planner for my 529 problem. So, please help me.

September/October of 2014, I rolled over my two sons’ 529 accounts from MOST 529 to Edward Jones 529. (I was working for the company)
March/April of 2015, I quit Edward Jones and wanted to move my accounts out of the company and initiated rollover back to MOST 529.
I thought I could do rollover once every calendar year.

When I found out that I couldn’t do another rollover with 12 months without having to pay penalties and taxes, I contacted Edward Jones and had them cancel the checks before they were received by MOST 529. Therefore, MOST 529 never received the checks, and the funds are back into the Edward Jones 529 accounts. Edward Jones’s now saying that they’ll still have to issue me 1099-Q next year, and there’s no way that I can avoid penalties and taxes.
Is that correct?

A representative from MOST 529 told me that I should be able to avoid penalties and taxes by “gifting” my older son’s funds to my younger son and vice versa within Edward Jones. But Edward Jones’s saying that it still doesn’t solve the problem and I’ll have to “explain” to IRA if they audit me, then they may or may not let me get away from paying penalties and taxes.
The funds are in cash now.

What can I do here?

Thank you,

Misook