Can I hold more than one state's 529 Plan?

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Topic Author
Mode32
Posts: 196
Joined: Mon Mar 02, 2020 1:24 pm

Can I hold more than one state's 529 Plan?

Post by Mode32 »

Bogleheads,

We have been contributing to the NY 529 Plan. We are not a huge fan of the individual investment choices for NY 529 Plan, but do it for the state tax deduction which is $10,000 for married filing jointly.

Question:
1. Can we contribute the $10,000 to NY 529 each year to obtain NY state tax deduction, and then contribute more money in the same year to another state's 529 Plan (because I like another state's individual investment options better)?

2. If we are able to do the above (contribute to my state's 529 Plan and another state's 529 Plan in the same year), are there any issues related to tax free growth and/or qualified withdrawals, or any other complications that we should be aware of when it's time to use the money (i.e., will we get taxed withdrawals that aren't from my state's 529 plan)?

Thanks in advance.

Stay safe.
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marti038
Posts: 232
Joined: Tue Mar 21, 2017 3:45 pm
Location: Birmingham, AL

Re: Can I hold more than one state's 529 Plan?

Post by marti038 »

We used Utah's 529 for a few years because our home state (Alabama) didn't offer one when our first child was born. A few years later, Alabama started a 529 along with a tax deduction for residents, so we opened an account and slowly transferred the funds over from Utah. In summary, both of my kids had one account in Utah and one in Alabama for a few years.

I think your only restriction is the amount each plan allows you to contribute. Of course, anything over $15k per year requires the gift tax notification to uncle sam.
Topic Author
Mode32
Posts: 196
Joined: Mon Mar 02, 2020 1:24 pm

Re: Can I hold more than one state's 529 Plan?

Post by Mode32 »

1. But can you contribute to two different state 529 plans for the same kids in the same year?

2. If we have UTMA’s for our kids too, does the yearly UTMA contribution factor into the amount we can put into 529 for each child? Meaning, does our UTMA plus 529 contribution total per year have to be $15K or less per child (or $30K if married) to avoid gift tax?

3. I was under the impression that the I owned the 529 plan for my kids, while my kids owned the UTMA’s...so I can contribute up to $15K yearly (or $30K if married) for each child in 529 and contribute up to $15K yearly (or $30K if married) in UTMA for each child. Please let me know if this a misunderstanding on my part.

Thanks
neverpanic
Posts: 471
Joined: Sun May 10, 2020 12:26 am

Re: Can I hold more than one state's 529 Plan?

Post by neverpanic »

Mode32 wrote: Thu Oct 22, 2020 11:59 am 1. But can you contribute to two different state 529 plans for the same kids in the same year?
Yes. There is no actual limit to the number of 529s you can set up. You're still limited to $15K individual/$30K married total per beneficiary to remain within the gift tax exemption, though.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
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