maximum allowable gift to kids?

Question

529 plan and tax free gift

Opened a 529 with 50k last year.
Put 1.1k just now as gift.
Wonder if this is too much for tax free transfer. Thanks!

Answer 1

You can gift $12,000 per year per child without having to report the gift. If you are married your spouse can also gift $12,000 per child also.
You don't say how many kids are involved. If more than two and you spread the 529 contributions equally you don't have a problem because you would not be over $24,000 per child.
If only two children are involved ten you would need to file a gift tax return for 2005 and make the election to spread the 529 contribution over a five year period.
Since there is not enough information to answer this question specifically I would suggest that you go to irs.gov and get the instructions for form 709 and read the part about electing the five year spread for gifts to a 529 account.

Answer 2

Because you gave $50k in one year you made a special election to hold off to gifts to that one child for 5 years (you in effect spread the gift over 5 years at $12,000 per year, until used up. See the instructions to form 709 Annual Gift tax return that you filed when you made the gift, if you did not file one then GO BACK AND FILE ONE NOW.

No more gifts until you are over the 5 year point.

Answer 3

See link below for 529 plans. Your gifting is fine but understand the non-tax differences. With 529 plans you do not control investments and funds must be used for college. With direct gifting you control investments and funds can be used for anything by child at age 21.

http://finance.yahoo.com/collegesavings/saving_vehicles/smart_strategies/article/100943/Head_of_the_Class_529_Plans

Answer 4

as much as one can afford

Answer 5

wow