529 Plans: Maximize Your Year-End Gifting
Squeeze six years of gifting into just two months
An investor should consider the Program's investment objectives, risks, charges and expenses before investing. The Program Disclosure Statement and Participation Agreement (www.scholars-choice.com/pds) contains more information and should be read carefully before investing.
If an investor and/or an investor's beneficiary are not Colorado taxpayers, they should consider before investing whether their home states offer 529 plans that provide state tax and other benefits such as financial aid, scholarship funds and protection from creditors that are only available to state taxpayers investing in such plans.
529 Plans: Take it to the Limit
By the end of 2019
Take advantage of the 2019 annual gift tax exclusion of up to $15,000 ($30,000 for joint filers), without incurring federal gift tax.
After January 1, 2020
Take advantage of 529's 5-Year “Accelerated Gifting” provision by gifting — in one lump sum — up to $75,000 ($150,000 for joint filers).1
Beat the Clock
When contributing by mail, remember that your envelope must be postmarked by no later than December 31st in order for it to be processed as a 2019 contribution.
Maximum Gift Tax Exclusion
This example assumes the client has made no other gifts to the Beneficiary this year (2019), and wishes to take full advantage of a) the 2019 Annual Gift Tax Exclusion ($15,000 for individuals; $30,000 for joint filers), and b) the “Accelerated Gifting” provision (up to $75,000 for individuals; $150,000 for joint filers).
The Annual Gift Tax Exclusion for 2019 is $15,000. This planning assumes no other gifts being made to the donee by the contributor. Contributions to an account for a beneficiary between $15,000 and $75,000 can be prorated over a five-year period without incurring federal gift taxes or reducing an investor's unified estate and lifetime gift tax credit amount of $11.2 million (2019). If the account owner dies before the end of the five-year period, a prorated portion of the contribution will be included in his or her taxable estate. Federal gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a given beneficiary in the year of contribution if the investor has used up his/her unified estate and gift tax credit.
1 Source: IRS Form 709 Instructions
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IMPORTANT INFORMATION: An investor should consider the Program's investment objectives, risks, charges and expenses before investing. The Program Disclosure Statement and Participation Agreement contains more information and should be read carefully before investing. If an investor and/or an investor's beneficiary are not Colorado taxpayers, they should consider before investing whether their home states offer 529 plans that provide state tax and other benefits benefits such as financial aid, scholarship funds, and protection from creditors that are only available to state taxpayers investing in such plans.
Investments in the Scholars Choice College Savings Program are not insured by the FDIC or any other government agency and are not deposits or other obligations of any depository institution. Investments are not guaranteed by the State of Colorado, CollegeInvest, QS Investors, LLC, Legg Mason Investor Services, LLC, or Legg Mason, Inc., or its affiliates and are subject to risks, including loss of principal amount invested.
Legg Mason, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
Scholars Choice® is a registered service mark of CollegeInvest. CollegeInvest and the CollegeInvest logo are registered trademarks. Administered and issued by CollegeInvest, State of Colorado. QS Investors, LLC is the Investment Manager and Legg Mason Investor Services, LLC is the primary distributor of interests in the Program; together they serve as Manager of the Program. QS Investors, LLC, ClearBridge Investments, LLC, Brandywine Global Investment Management, LLC, Western Asset Management Company, and Legg Mason Investor Services, LLC are Legg Mason, Inc. affiliates. Thornburg Investment Management, Inc. and Templeton Global Advisors Limited are not affiliated with Legg Mason, Inc.
Audited financial statements for the Scholars Choice® College Savings Program, including balance sheets, income statements, cash flow statements, and the Management's Discussion and Analysis (MDA), may be viewed at https://www.collegeinvest.org/about-us/financial-statements or a hard copy may be obtained by calling Scholars Choice at 1-888-572-4652.