How Much Can You Contribute to 529 Per Year
Unlike with 401(m) plans and other retirement savings vehicles, the IRS does not set almanac contribution limits for 529 college savings plans. Instead, usa that sponsor individual 529 plans set parameters for the life of the program. So what are the 529 plan contribution limits for plans you're considering? And how can you lot be sure to follow the rules and so as non to incur any penalties? Read on to find out.
529 Plan Contribution Limits by State
State contribution limits range from around $200,000 on the depression end to more than $500,000 on the high end per beneficiary.
And although 529 program contribution limits are typically loftier across each country, the limits apply to every type of 529 program account you open per beneficiary. And so let's say you open a direct-sold 529 programme and an advisor-sold 529 programme sponsored by New York for your child. The contribution limits in New York are set at $520,000. This means your combined contributions toward both plans tin't exceed that amount for i beneficiary. This maximum applies to the total contributions you make the unabridged time you invest in 529 plans. It'south non an annual contribution limit, similar the kind you'd see with retirement plans.
However, your balance can all the same grow by that corporeality through investment returns without limit.
The table below illustrates the current 529 program contribution maximums past state.
| 529 Plan Contribution Maximums by State | |
| State | Maximum |
| Alabama | $400,000 |
| Alaska | $475,000 |
| Arizona | $431,000 |
| Arkansas | $366,000 |
| California | $475,000 |
| Colorado | $400,000 |
| Connecticut | $300,000 |
| Delaware | $350,000 |
| District of Columbia | $500,000 |
| Florida | $418,000 |
| Georgia | $235,000 |
| Hawaii | $305,000 |
| Idaho | $350,000 |
| Illinois | $400,000 |
| Indiana | $450,000 |
| Iowa | $420,000 |
| Kansas | $402,000 |
| Kentucky | $350,000 |
| Louisiana | $500,000 |
| Maine | $475,000 |
| Maryland | $350,000 |
| Massachusetts | $375,000 |
| Michigan | $500,000 |
| Minnesota | $425,000 |
| Mississippi | $235,000 |
| Missouri | $325,000 |
| Montana | $396,000 |
| Nebraska | $400,000 |
| Nevada | $370,000 |
| New Hampshire | $500,000 |
| New Bailiwick of jersey | $305,000 |
| New Mexico | $500,000 |
| New York | $520,000 |
| Due north Carolina | $450,000 |
| Ohio | $462,000 |
| Oklahoma | $300,000 |
| Oregon | $310,000 |
| Pennsylvania | $511,758 |
| Rhode Isle | $395,000 |
| South Carolina | $500,000 |
| Southward Dakota | $350,000 |
| Tennessee | $350,000 |
| Texas | $370,000 |
| Utah | $446,000 |
| Vermont | $352,800 |
| Virginia | $500,000 |
| Washington | $500,000 |
| W Virginia | $265,620 |
| Wisconsin | $472,000 |
| Wyoming | $472,000 |
Tax Benefits by Land
Some states that sponsor 529 plans let yous make tax-deductible contributions or receive tax credits upwardly to certain limits. Some even allow you to make taxation-deductible contributions upwards to their 529 program contribution limits.
Seven states allow tax-deductible contributions into 529 plans sponsored by any land. They are Arizona, Arkansas, Kansas, Minnesota, Missouri, Montana and Pennsylvania.
Some states, yet, don't permit tax-deductible contributions fifty-fifty though they levy state income tax. They are California, Delaware, Hawaii, Kentucky, Maine, New Jersey, and Due north Carolina.
However, xxx states and the Commune of Columbia allow some kind of revenue enhancement deduction.
529 Plans and the Almanac Gift Tax Exclusion
The IRS treats contributions toward 529 higher savings plans equally gifts for tax purposes. Every bit of 2018, all the same, individuals can gift upward to $15,000 a year to any other individual without needing to written report the funds to the IRS for purposes of a gift tax.
But what most those massive 529 program contribution limits? Well, 529 plans offering a picayune bit of jerk room. Individuals tin put upward to $75,000 into a 529 plan at once or over a brusk flow while even so having that money excluded from the gift revenue enhancement. Married couples filing jointly tin do the same for up to $150,000. However, they'd need to put a concord on making further contributions for five years.
Yous can make contributions betwixt $15,000 and $75,000, and those funds volition exist prorated through five years. So y'all tin can transfer $fifty,000 in one year and the IRS will treat it as $10,000 contributed per year over five years. Therefore, you lot can make boosted transfers of upwards to $5,000 each of those years and still avert gift tax.
529 Contribution Limits And Lifetime Gift Exemption
And so what if yous contribute more than $75,000 over five years? That doesn't necessarily mean y'all'll exist hit with a gift taxation. Yous'll only have to report any gifts higher up the annual exclusion amounts on your federal revenue enhancement Class 709. In turn, those total will be calculated as part of your lifetime exclusion ($11.ii million per person in 2018).
If you do happen to give more than that limit, yous could incur a gift revenue enhancement of 40% for the excess amount.
The Takeaway
States set large contribution limits for 529 college savings plans. And any U.South. citizen can open an account with a 529 plan sponsored past any country. Just limits peak high across the country. And then 529 contribution limits shouldn't be the deciding factor when shopping effectually for a 529 plan to fund your child'due south educational future.
Tips on Making the Well-nigh Out of 529 Contribution Limits
- Don't focus as well much on the contribution limits when shopping around for 529 plans. Each state sets them fairly high. Plus, y'all're non likely to need to alienation the limit to fund necessary qualified expenses.
- 529 plans allow you to contribute upward to $75,000 into a 529 programme without triggering a souvenir revenue enhancement. Simply at that place are rules you must follow. Consult a financial counselor to make the virtually out of this benefit. If y'all've never worked with one earlier, you can utilize our SmartAdvisor matching tool to go paired upward with one. After answering a few simple questions, it links you to financial advisors in your expanse based on your unique fiscal needs. You can then review their qualifications and prepare interviews.
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Source: https://smartasset.com/investing/529-plan-contribution-limits
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