Ask Encore: Tackling questions on college, Social Security and annuities
Q: When you put money into a 529 plan for a child, is that considered part of the annual $11,000 gift limit?</br></br>Tom Beck</br></br>Wildwood, Mo.</br></br>A: Contributions to these state-sponsored college savings plans indeed count toward the annual limit on the money you can give away to a single individual without triggering gift tax. But there is a special rule that can help people, including many grandparents, who want to give a larger sum right away. You can make five years' worth of contributions to a 529 plan all at once -- meaning that a married couple could together give as much as $110,000 per child this year.</br></br>One caveat: If a donor dies before the fifth year, part of that gift is added back into the donor's estate for tax purposes.