Check my Combination Split Superfunding and annual Contributions to child’s 529

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Jvitale
Posts: 5
Joined: Sat Apr 10, 2021 9:34 am

Check my Combination Split Superfunding and annual Contributions to child’s 529

Post by Jvitale »

First time posting and I’m looking forward to responses.

Summary: I just received a large windfall. I would like to apply a significant amount to each of my two boys NY 529 plans. They are 13 and 14 years old (thus, about 5 years from college). My wife and I saved about $45K for each child. We got a slow start but are now currently committed to making $10K annual contributions to each child so we can take advantage of the maximum deduction for a married couple in NY ($10K). So, that is the back story.

Two-Step Strategy to protect against a market downturn.

Step1: contribute $75K to each child’s 529 plan to maximize the “single” parent gift tax contribution. I’m limiting it to $75K (and not $150K for married couples) because the market is currently at all time highs and I fear is due for a correction.

Step 2: contribute another $15K per child in each of the next 5 years. This maximizes the $30K contribution gift limit for couples. Allows for $10K deductions in each year. AND, protects somewhat against any market downturns in the next 5 years.

I have a few questions…
1. Do you like the strategy?
2. Do my wife and I need to open separate 529 accounts for each child to make the strategy work?
3. Or, can We contribute from our joint checking account and the tax accountant will simply work it out by submitting separate 709 forms each year?
4. How would the 709 forms need to be completed to keep this strategy compliant with guidelines.
5. We already made $10K contributions in 2020 but have not yet filed our 2020 returns. Can I go back and contribute more to 2020 before implementing this strategy for 2021 and beyond.

I’m sure I will have other questions. I welcome any other strategy or recommendation. I appreciate your feedback.

JV
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