Estate planning benefits
For the more serious planners or well-informed investors, there are additional features to a 529 savings plan with a longer-term focus.
529 assets are removed from the estate, yet you retain control
Contributions to your 529 account are considered a completed gift to the Beneficiary for federal gift and estate tax purposes and therefore are removed from your estate. Better yet, you full control of the account(s) and the funds – how they’re invested, why and when they’re withdrawn, and who receives them.
Most other investment options rescind your control when removed.
High contribution levels
The maximum contribution level in Colorado is $500,000 per Beneficiary (across all accounts for that Beneficiary). Think of all of the extended opportunities you may have with multiple Beneficiaries.
The Annual Gift Tax Exclusion
Your contributions qualify for the $16,000 annual gift tax exclusion ($32,000 for couples) per Beneficiary in 2022.
If you change the Beneficiary to another qualified family member of the same generation, no further gift is involved.
The 5-Year Election
You also have the option to make a lump sum contribution up to $80,000 (five years at $16,000 for each year) to get the immediate benefit of five years’ worth of gift tax exclusions. As a couple, you can double the impact to $160,000 for each and as many Beneficiaries as you have accounts. And, you can repeat this process every five years.
More 529 plan benefits:
Flexibility
When we talk with parents and grandparents about saving for college, flexibility is at the top of their concerns. It’s also the most inherent benefit of 529 savings plans.
Tax Benefits
For Colorado taxpayers, contributions to any CollegeInvest 529 account can be deducted from your Colorado state income tax return. Your earnings grow free of federal and state taxes.
Control
You as the Account Owner control the number of accounts, the beneficiaries, how much to save, what you pay for and when, and more. With the flexibility to change any of these when YOU want to.