A word of caution-- Assuming you make a $50,000 gift on Sec. 529 plan and elect the five year averaging, you will have used up your annual exclusion for 5 years. Any other gifts given within that 5 years will be subject to gift tax, which will decrease your unified credit. For example: Next year you give your child gifts for birthday, Christmas, etc that have FMV of $2,500. The total amount of gifts given would $12,500 ($10,000 from the averaging plus $2,500 current years gifts)which exceeds the $10,000 annual exclusion.I don't know if the IRS would catch something like this but be aware you are also making future gifts when you make a contribution in excess of $10,000 to Sec. 529 plan. Yes, the representative was very careful to point this out as well. We don't celebrate birthdays or christmas so I don't think this will be a problem, but I couldn't prove that we don't do this. However, I don't know how the IRS would know if someone did give gifts for these occassions (assuming they didn't give cash).Thanks,e
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