Section 529 Plan Contribution Limits

A primary benefit of 529 plans is the high contribution limit.

Section 529 plan contribution limits.

State contribution limits range from around 200 000 on the low end to more than 500 000 on the high end per beneficiary. 529 plan contribution limits by state. 529 plan aggregate limits. How to spend from a 529 college plan accessed nov.

Maximum contribution limits. Each state operates its own 529 plan and makes its own rules for the plan so maximum contribution levels vary across states. The irs limits plan contributions to no more than what is necessary to pay for a beneficiary s qualified educational expenses. Unlike iras or 401 k s there are no annual contribution limits for 529 plans however there are maximum aggregate limits which vary by plan under federal law 529 plan balances cannot exceed the expected cost of the beneficiary s qualified higher education expenses.

10 questions to consider before opening a 529 account accessed nov. College savings plan network. For a prepaid tuition plan the state s limit is a limit on the total contributions. However contributions to a 529 plan are considered completed gifts for federal tax purposes and in 2019 up to 15 000 per donor per beneficiary qualifies for the annual gift tax exclusion.

K 12 education one of the tcja changes allows distributions from 529 plans to be used to pay up to a total of 10 000 of tuition per beneficiary regardless of the number of contributing plans each year at an elementary or secondary k 12 public private or religious. Account owners can roll over 529 plans to able plans up to the able annual contribution limit. As state sponsored programs each state sets limits on how much can accumulate in 529 accounts. Most base the limit on the total expected cost of higher education at eligible institutions.

States may need to expand the definition of qualified withdrawals to include rollovers into able plans. And although 529 plan contribution limits are typically high across each state the limits apply to every type of 529 plan account you open per beneficiary. For example if the state s limit is 300 000 you can t contribute more than 300 000. Re contributions would not count against the plan s contribution limit.

A state s limit will apply to either kind of 529 plan. A qualified tuition program qtp also referred to as a section 529 plan is a program established and maintained by a state or an agency or instrumentality of a state that allows a contributor either to prepay a beneficiary s qualified higher education expenses at an eligible educational institution or to contribute to an account for paying those expenses. 529 plan advantages benefits accessed nov. Without a change to the definition such rollovers could be categorized as nonqualified withdrawals.

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