October 7, 2015 Published by Lindsay Bourkoff

Zach and Lindsay were recently interviewed by The Wall Street Journal on some intricate questions surrounding 529 college savings plans.  The article was featured in the print and online editions. You can find the full piece here.


Saving for a child or grandchild’s college education is an important goal for many of our clients and their families. Section 529 plans are one tax-advantaged way to save for college. Benefits of the 529 include tax-deferred growth, tax-free withdrawals for qualified higher education expenses, and the ability to contribute regardless of the contributor’s income.  Additionally, some states offer certain 529 owners a state income tax deduction on contributions.

An additional benefit of Section 529 plans are the high contribution limits. Normally, annual gifts of under $14,000, or $28,000 from a couple, do not require a Federal gift tax filing. With 529 plans, the limits are even more generous, allowing you to contribute five years of gifts all at once to the plan. In 2015, that means an individual can gift up to $70,000 gift tax free to each 529 plan, and a couple can gift $140,000. These contributions are also removed from the contributor’s gross estate.  (Just be aware that if the contributor doesn’t outlive the five-year gifting period, the gift is prorated annually and some amounts would indeed be included in the estate.)

So, for parents or grandparents who can afford to make sizable gifts, a 529 plan offers an opportunity to help save for college while reducing the contributor’s estate. As discussed in the Wall Street Journal article, even non-relatives can establish a 529 for a beneficiary.

If you have any questions about setting up a 529 plan or how it can help your situation, we’d be happy to help!





Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Withdrawals for purposes other than qualified education expenses may be subject to taxes and penalties. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
If the contributor front loads the gift contribution (e.g.,$70,000 gift contribution in a single year – 2015 limits), then dies within the five-year period, a prorated portion of the contribution may be included in the contributor’s estate
Tax laws and provisions are subject to change.
Content provided is for general information only and not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.
Lindsay Bourkoff and Zachary Shrier are a registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC