If you have grandchildren — or plan to — a 529 college savings plan is one of the most tax-advantaged wealth transfer tools available. And a strategy called 'superfunding' makes it even more powerful.

A 529 plan is a tax-advantaged savings account designed for education expenses. Contributions grow tax-free, and withdrawals used for qualified education expenses — tuition, fees, books, room and board — are also tax-free. Funds can be used at virtually any accredited college, university, trade school, or graduate program.

From an estate planning perspective, 529s offer a unique benefit: contributions are considered completed gifts to the beneficiary, removing them from your taxable estate. But the account owner (typically a grandparent) retains control — including the ability to change the beneficiary or even reclaim the funds (subject to taxes and penalties).

Superfunding: The IRS allows a one-time election to front-load five years of annual gift tax exclusions into a 529 account in a single year. In 2024, that means a grandparent can contribute $90,000 per grandchild ($180,000 for a couple) all at once — with no gift tax and no impact on the lifetime exemption — as long as no additional gifts are made to that beneficiary during the five-year period.

For a grandparent with multiple grandchildren, superfunding can rapidly move significant assets out of the taxable estate while providing meaningful educational support.

Recent legislation also allows up to $35,000 in unused 529 funds to be rolled into a Roth IRA for the beneficiary, subject to certain conditions — adding further flexibility.

📌 A 529 plan is one of the most versatile estate planning and education funding tools available. Contact us to discuss how to incorporate it into your overall strategy.