Eligibility:
Section 529 savings plans have the most flexible eligibility rules of any college savings vehicle. In essence, anyone can open and contribute to a Section 529 plan on behalf of anyone else, without regard to the age, income, or relationship of either party.
Contribution Rules:
The only limit placed on contribution amounts is a “lifetime limit” per recipient, which is set by each individual state. This limit is meant to keep individuals from dramatically over-funding a college savings account beyond what is realistically needed. This lifetime limit ranges from the mid $100,000’s to over $300,000, depending on each state’s plan.Additionally, contributors need to be aware of gift tax rules regarding larger contributions. Normally, a gift of over $12,000 to anyone besides your spouse will require you to file a gift tax return for that year.
Within Section 529 plans, there is a special provision that allows individuals to make five years’ worth of contributions ($60,000 per adult / spouse) into the plan in one year for one beneficiary, without owing a gift tax on the amount. A gift of this amount requires a special election to be made on a Federal Form 709 in the year of the initial gift. Any additional gifts to that person in the following five years, even if not into the Section 529 plan, will likely trigger a gift tax on the excess amount.
Contribution Deadline:
There is no deadline for contributing to a Section 529 plan.
