Series 52: 1.6.2.2. Contributions

Taken from our Series 52 Online Guide

1.6.2.2. Contributions

Each state sets contribution limits on 529 accounts. However, in most states these contribution limits are very high. In practice, the limitation that contributors most often run up against is the fact that 529 account contributions are subject to the gift tax. The gift tax is a federal tax paid by individuals who give large gifts. It was created to prevent individuals from evading the federal estate tax by transferring the bulk of the individual’s wealth to the intended heirs prior to the individual’s death. Municipal securities are not exempt from the gift tax.

Fortunately, every individual has an annual gift tax exclusion that exempts from the gift tax a certain amount given by the individual (to all recipients combined) during a particular year. In 2022, the exclusion amount is $16,000, and it is $17,000 for 2

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