When you make a gift to that special child in your life, whether a niece, nephew, grandchild, godchild or a friend’s child, you set them on the path to success. This gift also allows you to enjoy the special tax advantages offered through a 529 plan.
With TNStars, there is no federal gift tax on contributions up to $14,000 per year for single filers and $28,000 for couples filing jointly. Gifting assets is one way to reduce exposure to the estate tax. The advantage with 529 plans is that the value of the account is removed from your taxable estate, but you still control the account.
If you decide to jump-start the account of a beneficiary and exceed $14,000, you can do so through “superfunding.” Under special rules unique to 529 plans, you can gift a lump sum in a given year--up to $70,000 for individual and $140,000 for joint filers and avoid federal gift tax by making an election to treat the gift as if it were made evenly over a five-year period.