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Starting in 2024, you can roll unused 529 assets to a Roth IRA established for the beneficiary subject to certain conditions.

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Gifting


Any U.S. citizen or permanent resident alien 18 years of age or older with a valid social security number can open a Texas College Savings Plan account. Once an account is opened, anyone in your child’s life can contribute to the account. It’s a great way to celebrate a birth or other special occasion throughout a child’s life. Grandparents, aunts, uncles and friends will know they’re giving a gift that will be appreciated for years to come.

Give the gift of Education!

Gift Coupon

An Easy Way to Give

It’s easy to give the gift of a contribution to a Texas College Savings Plan account. Simply follow the instructions on the gift coupon. (You will need to know your loved one’s account number to fill out the gift coupon.) After the contribution is credited, the Account Owner:  The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. footnote 1 will receive notification of your gift.

Opening a Plan as a Gift

Qualified participants can open a Texas College Savings Plan account with as little as $25 and benefit immediately from potential estate tax and gift tax advantages.

Making a Contribution as a Gift

Contributing a gift to a loved one’s existing Texas College Savings Plan account helps them in saving for their college goal and will matter long after the gift is given.footnote 2

Gift Tax and Estate Tax Benefits

529 Plan:  A 529 plan is an education savings plan operated by a state or an educational institution and designed to help families set aside funds for college. It is named after Section 529 of the internal revenue code, which authorized these types of tax-advantaged savings plans in 1996. Earnings on 529 plans are tax-free if used for qualified higher education expenses. (Unqualified withdrawals may be taxable as ordinary income and subject to a 10% federal tax penalty.) The Pension Protection Act of 2006 made the tax-free character of 529s a permanent part of federal law. are partially exempt from the federal gift tax. You can contribute up to $18,000 annually ($36,000 for married couples) per Beneficiary:  The individual identified by the Account Owner whose Qualified Higher Education Expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose Qualified Higher Education Expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.

A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. or up to $90,000 over a five-year period ($180,000 for married couples) per beneficiary, without triggering the gift tax.

Completed gifts are excluded from the participant’s estate, thereby reducing potential estate tax obligations.footnote 3

 

Footnotes

  1. Non-account owners have no control over contributions. Only account owners may direct transfers, rollovers, withdrawals, investment changes and changes in the designated Beneficiary:  The individual identified by the Account Owner whose Qualified Higher Education Expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose Qualified Higher Education Expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.

    A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established.         Changes in beneficiary are limited to qualified family members of the current beneficiary to avoid federal tax consequences.
  2. If the contributor utilizes the special five-year lump sum exclusion and the Account Owner:  The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. dies within five years of the funding date, the portion of the contribution allocable to the years remaining in the five-year period (beginning with the year after the account owner’s death) would be included in the account owner’s estate for federal estate tax purposes. We recommend that you consult your tax advisor for more information on this option.
    Beginning on January 1, 2024, the annual gift tax exclusion will be indexed for inflation, increasing the exclusion amount to $18,000 ($36,000 for married couples making a joint gift). This means that the maximum gift amount under the five-year averaging provision will also be increased beginning in 2024 to $90,000 ($180,000 for married couples making a joint gift).
  3. See footnote 1.Non-account owners have no control over contributions. Only account owners may direct transfers, rollovers, withdrawals, investment changes, and changes in the designated beneficiary. Changes in beneficiary are limited to qualified family members of the current beneficiary to avoid federal tax consequences.