What are the advantages of a 529 college savings plan?
There is no limit on contributions but some states tend to limit contributions once the plan assets have reached a defined maximum (typically $200,000 - $250,000). Under a special election, you may make contributions of up to $70,000 per beneficiary in a single year without triggering a federal gift tax by accelerating five years worth of contributions (gifts) as of 2013. Married couples may contribute $140,000 per beneficiary in a single year.*
Assets are professionally managed by fund managers selected by the state. Participants can choose from two to almost 30 mutual fund-type investments. Control of the account remains with the contributor regardless of the age of the beneficiary.
* A $70,000 gift is viewed as an accelerated gift over five years. Any other gifts to the same beneficiary by the contributor within five years may result in a federal gift-tax liability. If the contributor dies within the five-year period, a prorated portion of the contribution may be included in his or her taxable estate for federal estate tax purposes.
The results and explanations generated by this calculator may vary due to user input and assumptions. New York Life Insurance Company does not guarantee the accuracy of the calculators, results, explanations, nor applicability to your specific situation. We recommend that you use this calculator as a guideline only and you ultimately seek the guidance of an experienced professional.