Is the 529 contribution a gift to owner or beneficiary

Forum|Forum|2 years ago
July 9, 2023
3 replies
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As a grandparent if I contribute to a 529 where the owner is a parent and the beneficiary is a grandchild of $17k in 2023, is this considered a gift to the beneficiary? Can I give a gift outside of the 529 to the parent who is the owner of the 529.

TurboTax Online

TomD8

Employee

"...is this considered a gift to the beneficiary?"

Yes.

"Can I give a gift outside of the 529 to the parent who is the owner of the 529."

Yes.

Be aware of the generation-skipping transfer tax. This TurboTax help article explains:

https://turbotax.intuit.com/tax-tips/family/what-is-the-generation-skipping-tax/L5mfqiA5z

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Hal_Al

Employee

Be aware that a special 529 rules allow you to use five years of annual exclusions at once for a tax-free gift of up to $85,000 (joint taxpayers may fund $170,000). This is sometimes referred to as Superfunding a 529 Plan.

Reference: https://www.savingforcollege.com/article/dont-worry-too-much-about-the-annual-gift-tax-limit

"Gift Tax" is somewhat of a misnomer. Even though a gift tax return may be required, very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html