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Can a family member transfer funds to a 529 plan as a gift tax exempt?

Kevin Sutter

in Student Loans

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Victoria Fowler on March 1, 2019

An individual can give up to $12,000 per year per donee without gift tax consequences. A married couple may double that amount through "gift-splitting".. makes no differencece if the gifts are placed in a 529 plan or given directly to the donee. However, some states have tax deductions for contributions to their 529 plans. It could be for the benefit of the donee, or the donee's parents, have the gift to go to them first, then they can make their own tax-deductible contribution. Of course, if the state allows donors to take the deduction for the contribution, the donor could put the funds directly into the 529 plan.. There are no tax consequences to the donee of a gift.. I recommend this proposal be discussed with a CPA before you act on it.


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