Understanding 529 Contribution Limits

Key facts

  • 529 plan maximum contribution limits vary by state.
  • 529 plan contributions over the gift tax exemption limit may incur gift taxes.
  • Individuals can “superfund” a 529 plan by gifting up to five years of contributions at once when opening the account.

When it comes to saving for college, the more you set aside now for your child’s education, the less you will have to worry when tuition bills start arriving. Opening a 529 college savings plan is a great way to get started, and understanding its contribution limits is an important first step.

529 Savings Plan Rules

Though the 529 college savings plan is set up through federal IRS regulations, the plans are organized and operated by each individual state. As a result, there are 51 variations of the program, one for each state and Washington, D.C. Each follows the same set of federal rules, including the types of education expenses that qualify for distribution and list of eligible colleges and universities. However, maximum contribution limits are left to each state’s discretion.

State Variations in 529 Contribution Limits

Some states don’t set contribution limits for 529 accounts, and those that do typically set the limits quite high, ranging approximately between $200,000 and $500,000 across all accounts for a single beneficiary.

The contribution limits in each state typically apply to all of the same-state plans opened for a single beneficiary. For example, the Nevada 529 College Savings Plan currently has an annual per beneficiary contribution limit of $370,000. This means that total contributions to all Nevada plans naming the same beneficiary, regardless of who owns the account and how many accounts there are, cannot exceed $370,000. However, contributions to accounts for this beneficiary in another state’s 529 plan are not included in this limit. The specific rules around maximum contributions can vary between states. Check your enrollment kit for the specific rules relevant to your plan.

Superfunding Your 529 Plan

Contributions to a 529 plan on behalf of a beneficiary are considered a completed gift for tax purposes. While gifts up to a certain limit are exempt from taxes, exceeding the annual gift exemption limit can trigger an expensive gift tax. The exemption amount is reviewed each year, and it is adjusted if appropriate based on market conditions. In 2014, 2015 and 2016, the maximum amount each person could gift was $14,000. For example, couples can contribute $14,000 apiece to a 529 plan for each of their children, resulting in a $28,000 contribution for each child for the year.

Superfunding a 529 plan offers a way to accumulate a large balance upon enrollment without losing a significant amount of money to gift taxes. When you open your 529 college savings account, you can give up to five years of gift money in advance. If you choose this option, based on the 2016 exempted amount, you can contribute up to $70,000 without triggering gift tax requirements.

Note that because you would have then used five years of gift tax exemptions at once for your beneficiary when superfunding, you are not eligible to use a gift tax exemption for the same beneficiary during the same five-year period.  You will be able to qualify for gift tax exemption once the five years have passed, and you may choose to superfund again.


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This article is not intended as tax advice, and Wealthfront does not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. Wealthfront assumes no responsibility for the tax consequences to any investor of any transaction. Investors and their personal tax advisors are responsible for how the transactions in an account are reported to the IRS or any other taxing authority.

For information on any 529 college savings plan contact the plan provider for details on the investment objectives, risks, charges, expenses, and other important information included in the Plan Description and Participation Agreement; read and consider it carefully before investing.

Please Note: Before investing in any 529 plan, you should consider whether you or the beneficiary’s home state offers a 529 plan that provides its taxpayers with favorable state tax and other benefits that are only available through investment in the home state’s 529 plan. You also should consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plans’ features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

Earnings on nonqualified withdrawals are subject to federal income tax and may be subject to a 10 percent federal tax penalty, as well as state and local income taxes. The availability of tax and other benefits may be contingent on meeting other requirements.