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Who Can Contribute to My Kid’s 529 Account?

By Team Tomorrow
Published May 20, 2021

Saving for college can be a frustrating experience. Tuition rates are rising across the board, and yet higher education is more important than ever. Finding creative ways to pay for college is becoming almost essential.

Starting a savings account early in life is a great place to start. One of the most common approaches for doing so is opening up a 529 account. Operated by states and educational institutions, 529 plans come along with certain advantages such as tax breaks and other incentives, making the process of saving for college less of a struggle for many people.

One of the biggest questions that people have about 529 accounts is who can contribute to them. There are a few key things to consider, so let’s go through them one-by-one.

Who Can Contribute to a 529 Plan?

Requirements Involving Age/Income

There are a number of different types of savings plans that involve income restrictions. ESA plans fall into this category, for example. But you can rest easy knowing that 529 accounts have absolutely no income-related restrictions attached to them. There are generally no age restrictions on these accounts, although there are a small number of 529 plans that do. Specifically, these restrictions refer to the age of the beneficiary—not the contributor.

In such cases, age can determine the types of investment options available to the contributor. Take prepaid tuition programs for example, in which cost per credit may depend upon the number of years before a beneficiary reaches a certain age. Always check with the provider of a 529 plan to ensure age and income restrictions do not apply.

Changing the Beneficiary

One of the most common questions about 529 plans is whether or not the beneficiary can be changed to someone else. There are numerous reasons why this might occur, such as the beneficiary passing away. In the case that it becomes necessary or preferred to change the beneficiary on a 529 plan, a qualified family member can be chosen to become the new beneficiary. Individuals who qualify can be the designated beneficiary’s spouse, child or another immediate family member. In-laws and even the owner of the beneficiary’s place of residence for an entire tax year can qualify.

In the case that a new beneficiary has been chosen, the rollover of money from one person to the next must occur within 60 days. This change can also be made simply by changing the name and Tax ID on the 529 account to that of the new beneficiary.

The person who starts the plan is essentially its custodian, controlling the funds until it’s time for them to be released. As such, you can make certain changes as needed.

Contribution Limits

It’s important to understand that there is a limit on the amount you can contribute each year to a 529 account. Contributions can’t generally exceed $14,000 per year from a single person, as gift tax consequences can otherwise result. That said, it may be possible to superfund a 529 with up to 5 years worth of gifts.

The bottom line is that anyone can contribute to a 529 plan, which can be instrumental in helping families pay for college.

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Arrow left icon General Family/Lifestyle