The 529 College Savings Plans
A 529 Plan is an education savings plan
designed to help families set aside funds for future college costs. Created in 1996, it is
named after Section 529 of the Internal Revenue Code.
By investing in a 529 College Savings Plan, you can save for your child's or grandchild's education, and, at the same time, reduce your federal taxable estate.
The Current Advantages Include:
Contribution minimums are as low as $50.00 per month in most plans, so getting started is easy.
Contribution maximums are up to $65,000 one time, per beneficiary, or $13,000 over 5 years, per beneficiary.
Example: Let's say we have one beneficiary, grandchild Tommy. Tommy has two (2) sets of grandparents. Hence, the maximum that all four (4) grandparents could contribute would be $65,00 each or a total of $260,000 for a given five (5) year period. After five (5) years, they could place another $65,000 each for the benefit of Tommy.
As your read above, you have the option of moving the beneficiary designation from one person to another, as long as they are consider 'extended family'.
EX. Let's say, you made $65,000 deposits for both grandson and granddaughter - the years pass and you realize the grandson has no need for his 529 Plan monies- you could then change the beneficiary desigination to grandaughter.
This would constitute a gift under estate tax rules. However, there may or may not be gift tax consequences because it depends on the year you actually changed the beneficiary designation.
If, for example, you changed the beneficiary designation within the first 5 years, there could be gift tax consequences. If you did so after the 5th year, there would be none.
However, should this situation arise (less than or greater than 5 years), you could slide partial amounts, as well. Since estate and gift tax rules seem to be changed every 2-3 years, who knows what the estate tax gift rules will be when it comes under consideration for you. THEREFORE, you and your advisor would simply need to deal with the options available at that time.
Please keep in mind that 529 'gifts' are not in addition to regular money gifts that you can claim as part of your $13,000 annual exclusion per beneficiary.
Action To Take
Click HERE to obtain 529 College Funding information
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Fielder Financial Management, LTD.
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Securities offered through Fortune Financial Services, Inc. member FINRA, SIPC. Fielder Financial Management, Ltd. not affiliated with Fortune Financial Services, Inc. Mark Fielder, Financial Professional, CA. Insurance Lic. # 0690576.