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529 plans are no one-hit wonders. Not only are they a flexible way to save for college, but they also offer tax advantages not found anywhere else.

Many investors know that 529 plans provide significant education planning benefits, including tax-deferred growth on account assets and tax-free distributions for qualified expenses. But few are aware of the opportunities for those who want to contribute to 529 plans in a tax-efficient manner:

For 2023, each person has a federal gift tax exclusion of $17,000, or $34,000 for a married couple. Contributions to a 529 plan qualify for this exclusion.

A special accelerated gifting rule allows each donor to gift up to 5x the annual gift tax amount in a single year, without incurring gift tax consequences.¹

Although the account owner retains control of the assets in a 529 plan, those assets are excluded from the donor’s or owner’s taxable estate.

Video highlights the perfect duo of 529 plan benefits

For more details on how 529 plans can help your clients maximize college savings — and maximize tax advantages — watch our recent Asset TV video.

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HIT THE RIGHT NOTES WITH YOUR CLIENTS

As 2023 comes to an end, there’s still time to help clients maximize the benefits of Future Scholar’s advanced gifting features. Check out some of our greatest hits:

Accelerated gifting: How to make the most of your contribution

Real-life examples offer a detailed look at the benefits of accelerated gifting.

Download client-friendly infographic »

Maximize tax-free gifts

Discover the tax-aware funding opportunities for people who want to contribute to their family's 529 plan.

Download article »

529 gifting and estate planning strategies

Explore how investing in a 529 plan could lead to decades of tax-deferred growth outside of one’s taxable estate.

Download article »

Disclosures

¹A person who chooses to take full advantage of the five-year spread for 529 plans would not be able to give additional gifts to that person during the five-year period without filing a gift tax return, unless the gift tax exclusion were increased, such as through an inflation adjustment in a subsequent year.

Please consider the investment objectives, risks, charges and expenses carefully before investing. Contact your financial advisor or visit www.columbiathreadneedle.com for a program description, which contains this and other important information about the Future Scholar 529 College Savings Plan. Read it carefully before investing. You should also consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program.

Columbia Management Investment Distributors, Inc., member FINRA, is the distributor and underwriter for the Future Scholar 529 College Savings Plan Financial Advisor Program. The Office of State Treasurer of South Carolina (the State Treasurer) administers the program and has selected Columbia Management Investment Advisers, LLC. (CMIA) as program manager. CMIA and its affiliates are responsible for providing certain administrative, recordkeeping and investment services, and for the marketing of the program. CMIA is not affiliated with the State Treasurer.

Any tax information given on this site is general in nature and does not constitute tax advice on the part of Columbia Management Investment Distributors, Inc. or its affiliates. The information cannot be used for the purposes of avoiding penalties and taxes. Consult with your tax advisor regarding how aspects of a 529 plan relate to your own specific circumstances.