You can get around that $15,000 limit via a special gifting feature per an Internal Revenue Service (IRS) rule that allows you to front-load a 529 plan for up to five years at one time with no gift-tax consequences.

How much can you start a 529 with?

There are no annual contribution limits for a 529 plan, but you can give up to $15,000 ($30,000 as a couple) each year without incurring gift taxes or using up part of your lifetime gift tax exclusion.

What is the maximum contribution to a 529 plan in 2020?

The 5-year election allows you to contribute up to $75,000 to an individual’s 529 plan in a single year while spreading it out over 5 years. For each of the 5 years, you must report the 5-year election on IRS form 709. This is a great option to use if you anticipate higher expenses during the first year.

Is there a cap on 529 contributions?

529 plan aggregate limits Unlike IRAs or 401(k)s, there are no annual contribution limits for 529 plans. Under federal law, contributions to a 529 plan cannot exceed the expected cost of the beneficiary’s qualified higher education expenses.

Can a grandparent own a 529 plan?

Changes to Grandparent 529 Plan Rules That means a grandparent-owned 529 plan will not have any impact on need-based financial aid eligibility. Because of this “prior-prior” rule for income reporting, grandparents can start taking advantage of the new rules this year.

What to consider when opening a 529 savings plan?

There are several factors to consider when opening a 529 college savings plan. The first factor to consider is whether you get any state benefits for your contribution to a 529 plan. Right now, 30 states offer tax deductions for contributions to a 529 plan.

What happens if you Superfund a 529 plan?

Superfunding their 529 plan accounts would reduce their estate by $1.5 million in a single day without using any of their lifetime exemptions. Tax law allows 5-year gift tax averaging only for gifting that involves 529 plans (and in rare situations, Coverdell education savings accounts).

How much can you contribute to a 529 plan each year?

The $65,000 contribution under a 5-year election is treated as a $13,000 gift each year, and this year’s total gifts (including the $10,000 to the life insurance trust) will now be $23,000.

Are there any states that offer a 529 plan?

Right now, 30 states offer tax deductions for contributions to a 529 plan. However, of those 30 states, only 6 of them offer tax deductions to use ANY state’s plan: Arizona, Kansas, Minnesota, Missouri, Montana and Pennsylvania.