Message Font: Serif | Sans-Serif
No. of Recommendations: 0
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).

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.