Questions about 529

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
A_C_E
Posts: 107
Joined: Fri Feb 22, 2013 11:22 pm

Questions about 529

Post by A_C_E » Wed Apr 19, 2017 3:20 pm

For a hypothetical family of 4-2 parents and 2 kids:
1. Both husband and wife can contribute 14 k to each kids account so each kid ends up with 28k and each parent contributed a total of 28 k without any gift taxes right?
2. If the parents choose to lump sum , the total would be 280k- 140k per kid between the two parents?
3. If there is a state tax benefit, it is only in the year contributed. So for a state that allows a 4K deductible, it is better to lump sum a large part in first year and then a smaller amount each following year over the next 4 years so one can still benefit from the tax deduction? How would I know what the optimal upfront and yearly amounts are? Also, if both parents contribute to two kids in the above example, would the total deduction be 16k i.e. 4K x 2 parents x 2 kids or is it capped at 4K?
4. Can both parents contribute to the same 529 or should there be two 529s for two kids? If one account suffices how would each person keep track of the contributions?
5. Lastly, if the kids grand parents live in another country and want to contribute to a 529 with uesp or vanguard, how can this be done? Does it still have to stay in the 14 k limit? Can they do it through the parents 529 account or should they open a new 529 account? And can each grand parent and each parent contribute 70k per kid for a total of 280k per kid and 560k for both kids? Does this change if grandparents live in the US ? Any tax implications?
Thank you!

A_C_E
Posts: 107
Joined: Fri Feb 22, 2013 11:22 pm

Re: Questions about 529

Post by A_C_E » Thu Apr 20, 2017 1:18 pm

If the questions are complex can anyone tell me whom to ask? Uesp doesn't know even. Nor does My accountant.

ModifiedDuration
Posts: 43
Joined: Sat Dec 05, 2015 4:33 pm

Re: Questions about 529

Post by ModifiedDuration » Thu Apr 20, 2017 1:48 pm

I have had a 529 help me send three kids to college, so I will take a shot at it for you:

1) Yes, 28K per child between the two parents each year without gift tax (or using a portion of your lifetime $5.45 million exclusion).
2) Correct, but just remember that you can then make no gifts to either child over the next 5 years without using a portion of your lifetime $5.45 million exclusion.
3) I assume that it depends on the state. Since you refer to the UESP, I assume that you are in Utah. Utah allows a 5% credit for 4k for a married couple for each beneficiary, so between you and your spouse you could contribute up to 8K a year and get the credit.
4) We set-up a 529 for each parent, but I don't know that you really need to do that.
5) I do not know how it would work if the grandparents are citizens of another country.

Good luck!

User avatar
EATaxGuy
Posts: 111
Joined: Mon Apr 10, 2017 12:56 pm

Re: Questions about 529

Post by EATaxGuy » Thu Apr 20, 2017 1:56 pm

3. In Virginia you can deduct $4,000 per account to which you've contributed from your Virginia income taxes. If you contributed more than that the unused deduction carries over until it is used. If you are over 70 there is no annual limit to the deduction. Virginia grandparents can go buck wiley on a 529. :shock:

5. The states have maximum limits on 529 accounts - a level above which contributions are no longer allowed. Check with your state to know whether you'd be brushing up against those limits.
You may have been handed a cactus, but sitting on it is up to you.

User avatar
goodenyou
Posts: 1036
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: Questions about 529

Post by goodenyou » Thu Apr 20, 2017 3:15 pm

A_C_E wrote:If the questions are complex can anyone tell me whom to ask? Uesp doesn't know even. Nor does My accountant.


http://www.savingforcollege.com/
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

Post Reply