Superfunding Calculator (2024)

FAQs

How much can I contribute to my Superfund 529 plan in 2024? ›

In 2024, with the $18,000 annual contribution limit per child per parent, you could contribute up to $90,000 per child per parent. You can also choose to contribute more than $18,000 but less than the full potential superfunding amount, but there are some rules to keep in mind here.

With 529 plan superfunding, individuals may contribute up to $90,000 ($180,000 for couples) per beneficiary if it is treated as if it were spread over a five-year period. This superfunding amounts starts in 2024.

By superfunding your 529 plan with a lump-sum contribution of $50,000, in 18 years when your child is ready to enter college, your account balance will have increased to $120,331. By dividing $50,000 into monthly contributions of $231 instead, your account balance will have only increased to $81,509.

In five years' time, they can superfund each of those 529 plans again and further reduce their estate.

Individuals may contribute as much as $90,000 to a 529 plan in 2024 ($85,000 in 2023) if they treat the contribution as if it were spread over a five-year period. The 5-year election must be reported on Form 709 for each of the five years.

For in-state, four-year, public college: minimum $300 per month. For out-of-state, four-year, public college: minimum $500 per month. For private, non-profit, four-year college: minimum $650 per month.

While contributions to 529 accounts aren't tax deductible, earnings grow free from state and federal taxes. Since California doesn't provide a tax deduction for contributions to 529 accounts, California residents can invest in any state's 529 plan and still benefit from potential tax-advantage growth.

A 529 plan gives both parents and grandparents the option to contribute to a child's education fund. They have no annual contribution limit and an individual can contribute up to $17,000 per year while avoiding gift tax rules, or $34,000 per couple.

If a 529 still has leftover funds after all of the above options, and there really is no chance that it will be used for educational expenses, it is possible to go ahead and take a distribution from the account. A 10 percent penalty will apply and taxes will be paid on any earnings.

While over 16 million American families save for college using 529s, 54% of parents are unaware of the 529 program(s). In 2023, families had $450.5 billion saved for college in 529 plans, making the average 529 account balance $27,741.

How much is $100 a month for 18 years? ›

This chart shows that a monthly contribution of $100 will compound more if you start saving earlier, giving the money more time to grow. If you save $100 a month for 18 years, your ending balance could be $35,400.

After a 529 plan is funded, the account owner must choose investments for the 529 plan. If the account owner did not choose any investments, keeping the funds in cash, the 529 plan will not have grown in value. Some 529 plan investments, such as stock mutual funds, can lose value.

This strategy allows you to fund a 529 plan while protecting a child's lifetime gift and estate tax exemption. Individuals can contribute up to $90,000 per beneficiary in 2024, which is spread out over five years.

However, a special rule allows you to make a lump-sum contribution in a single year and treat it as though it was made over five years for gift tax purposes. For example, you can contribute $85,000 (5 years x $17,000) in 2023 to jump-start a 529 college savings account for your child.

Key Takeaways. The purpose of a 529 plan, or qualified tuition plan (QTP), is to pay future education costs. Front-loading a 529 plan allows earnings to be compounded on more money over a longer period.

The IRS treats contributions toward 529 college savings plans as gifts for tax purposes. In 2024, however, individuals can gift up to $18,000 (up from $17,000 in 2023) a year to any other individual without needing to report the funds to the IRS for purposes of a gift tax.

Beneficiaries are allowed to roll over up to $35,000 over their lifetime into a Roth IRA in their name (not the original 529 account holder's name). This limit is subject to the annual Roth IRA contribution limit, which is $7,000 in 2024. The 529 account must have been open for more than 15 years.

Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions. Annual catch-up contributions up to $7,500 in 2023 and 2024 ($6,500 in 2021-2020; $6,000 in 2015 - 2019) may be permitted by these plans: 401(k) (other than a SIMPLE 401(k)) 403(b)