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Financial Planning / Tax Strategies


Subject:  Re: 529 Plans and Gift Taxes Date:  9/19/2013  7:26 PM
Author:  JAFO31 Number:  119169 of 123022

I believe I have my answer:

"Section 529 plans also provide favorable federal estate and gift tax provisions, making them a valuable estate planning tool. There is an accelerated gift option that allows you to average gifts over $13,000 per beneficiary ($26,000 for married couples) over a five year period without incurring federal gift tax. So an individual can contribute up to $65,000 per beneficiary in one year and a couple up to $130,000 per beneficiary without incurring gift tax. [[[NOTE - this was written before recent increase to 14k per year annual exclusion ammount]]] If you give the full amount, you will not be able to give any gifts to the same individual during the five year period without incurring gift tax or using up a part of your lifetime exclusion.

Contributions below the annual gift tax threshold are immediately removed from the donor's gross taxable estate (and included in the estate of the beneficiary). Unlike certain types of trust funds, contributions to section 529 plans are considered a completed gift of a present interest and so are excluded from the donor's gross estate.