Estate planning

Learn about CollegeBound 529

529 as an estate planning tool

An important part of any strategic financial plan is estate planning. 529 college savings plans, like CollegeBound 529, offer a unique benefit that can help estate planning efforts while saving for college — accelerated gifting.

The basics: Gifting benefit Contributions of up to $15,000 per year, per beneficiary, into CollegeBound 529 accounts without paying gift taxes. For instance, an account owner can contribute the maximum into college savings accounts for six grandchildren, that would equal $90,000 ($15,000 x 6) with no gift tax exposure. If a spouse also contributed the same amount, the resulting $180,000 ($90,000 x 2) would be gift tax free.
The next level: Accelerated gifting
  • For a single contributor, that equals $75,000 per beneficiary.
  • For a couple filing jointly, the allowable amount is $150,000.
The benefits of accelerated gifting
  • Estate planning: Up to $75,000 ($150,000 if married, filing jointly) can be removed from your taxable estate at one time.1
  • Compounding: A gift can be invested for a longer time, which could potentially give it a chance to grow faster than if contributing the annual amount each year.
  • Control: The account owner controls the assets in the 529 plan account. If needed in an emergency, the account owner has access to them (penalties may apply if withdrawals are not used for qualified higher education expenses).2

 

Learn more about the advantages of a 529 plan.

Learn more about tax benefits per state.

1 In the event the donor does not survive the five-year period, a pro-rated amount will revert to the donor's taxable estate. For more information, consult your tax advisor or estate planning attorney.

2 Earnings on nonqualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

None of the State of Rhode Island, its agencies, Invesco Distributors, Inc., Ascensus College Savings Recordkeeping Services, LLC, nor any of their applicable affiliates provide legal or tax advice. This information is provided for general educational purposes only and is not to be considered legal or tax advice. Investors should consult with their legal or tax advisors for personalized assistance, including information regarding any specific state law requirements.