But wait, there’s more: A brief guide to accelerated gifting in 529 Plans
Key takeaways
Contributing five years’ worth of gift exclusions at once to a 529 plan can significantly boost long-term growth potential and leverage tax advantages.
Strategic use of accelerated gifting supports multigenerational wealth transfer.
Important tax rules and estate considerations should be coordinated as donors must file Form 709 to elect five-year averaging, while spouses must consent for gift-splitting.
For clients with higher gifting capacity, accelerated gifting is one of the most powerful planning tools in a 529 plan. Also known as “superfunding,” this strategy allows individuals to contribute five years’ worth of annual exclusion gifts at once, providing an immediate boost to a child’s college savings and potentially maximizing tax-advantaged compounding.
When executed thoughtfully, accelerated gifting has the potential to meaningfully increase the long-term value of a client’s education savings goals, deliver estate-planning benefits, and fully leverage the tax-advantaged structure of CollegeBound 529. But it also requires careful coordination with gift-tax rules and beneficiary and estate planning strategies.
Below is an overview of how accelerated gifting works, when it’s effective, and the tax rules to keep in mind.
How accelerated gifting works
The IRS permits an individual to contribute up to five times the annual gift tax exclusion to a 529 plan in a single year and elect to treat that gift as though it were made evenly over five years.
For 2026, the annual exclusion is $19,000, meaning:
- $95,000 per individual
- $190,000 for a married couple electing gift-splitting
The donor must file IRS Form 709 for the year of contribution and check the box to elect five-year averaging. If the donor contributes more than the allowable five-year maximum, the excess simply reduces the donor’s lifetime gift and estate tax exemption, which is $13.99 million per individual in 2026.
Most donors will not come close to exhausting their lifetime exemption, which makes accelerated gifting a highly deployable, low-friction strategy in multigenerational planning.
Why accelerated gifting is impactful: Four planning scenarios
Below are four scenarios where financial professionals can unlock meaningful value.
1. Funding early to maximize long-term growth
Accelerated gifting gives younger beneficiaries the longest possible runway for tax-advantaged compounding. When paired with CollegeBound 529’s equity-heavy early allocations in its Year of Enrollment Portfolios, those upfront dollars have greater potential to pursue long-term growth.
2. Grandparents seeking an efficient and controlled wealth transfer
Accelerated gifting is especially attractive for grandparents who want to support education while managing estate, tax, and legacy goals. It removes assets from the taxable estate, preserves donor control, and avoids FAFSA impact under updated rules.
3. Families with multiple beneficiaries
Superfunding helps establish a more equitable baseline for siblings or grandchildren of different ages, preventing future imbalances caused by varying compounding periods. It also simplifies administration for families making gifts across multiple accounts by reducing the need for ongoing adjustments.
4. Clients experiencing liquidity events
For clients experiencing a liquidity event, accelerated gifting allows them to efficiently deploy capital in a tax-advantaged way during a high-income year. It can also serve as a strategic bridge between cash-flow management, wealth transfer, and long-term education planning.
Key tax rules and considerations for advisors
To implement accelerated gifting effectively, financial professionals should walk clients through several important mechanics:
1. The five-year election must be made on Form 709
Failing to elect five-year averaging results in the entire contribution counting in the year made, which could unintentionally use more of the lifetime exemption than desired.
2. Gift-splitting requires both spouses to consent
Even if one spouse makes the contribution, couples may elect gift-splitting on Form 709 to double the exclusion.
3. Donor death triggers prorated estate inclusion
If the donor dies within the five-year period, the remaining prorated portion of the gift is included in the donor’s estate. Advisors should coordinate with estate planning professionals to ensure the consequences are understood.
4. Beneficiary changes can create new gift events
Changing beneficiaries across generations, or between families, may trigger new gift-tax implications. Advisors should evaluate the full effect before facilitating changes.
Helping clients determine if accelerated gifting is right for them
Accelerated gifting is far from a universal solution. However, for clients with sufficient liquidity, strong multigenerational intentions, or a desire to make a high-impact early gift, it can be an effective tool. With careful planning, it can play a big role in helping families meet long-term education goals while integrating smoothly into broader wealth-transfer strategies.
