Bucks Writs - Summer 2018 - 22
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Not Your Average 529 Plan
[ Education Planning, Part 2 ]
- By Marianna Goldenberg, CDFA
I
n Not Your Average 529 Plan - Part 1 we reviewed
basic definitions and uses of 529 and 529 ABLE
Let's break this down in an example for a
married couple.
plans for education planning. In Part 2 we are going
Now - December 31, 2018
Standard gift is made:
$15,000 x 2 individuals = $30,000
to discuss non-traditional ways to use 529 plans, specifically for retirement and estate planning.
Estate Planning
Anytime in 2019
Forward gift contribution is made:
$15,000 x 5 years x 2 individuals = $150,000
While 529 plans are commonly used for education
savings, they can also be used for tax-efficient estate
transfer. This can be done through a process called
forward gifting or superfunding. This process takes
advantage of a unique provision in Section 529 of the
IRS Code that allows people to gift five years' worth of
contributions in the present year without incurring a gift
tax consequence. If you remember from Part 1, the IRS
allows for an annual gift of
up to $15,000 per recipient
for individuals ($30,000
for married couples)
annually without gift-tax
consequences (as of 2018).
(assuming 2018 limits)
2020 - 2023
No gift
By following this method, you'll have removed $180,000
from your estate by gifting it, tax-free, between 2018 and
2019. You can then continue this process in 2024.
Keep in mind, even though contributions to a 529 plan
are revocable (owner can claim their contributions back),
plans are treated as completed gifts to the account
beneficiary, and the 529 account value is removed from
the taxable estate.
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Table of Contents for the Digital Edition of Bucks Writs - Summer 2018
Bucks Writs - Summer 2018 - 1
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