529 plan question

December 7, 2010 10:53 PM

529 plan question: If my child receives gifts from his relatives "for college" can I put that money in the 529 plan I setup for him and that I am a trustee of and not have it count again my gift tax exclusion?

These gifts would put me over the gift tax exclusion if they counted against my exclusion. Also these gifts are usually given to me as cash or check (made out to me).

If so, what is the reporting/recordkeeping burden on me?

posted by stchang to Work & Money (3 answers total)

You need to talk with a qualified estate planning attorney. The cost is minimal in light of the amounts you are talking about.

One example: There are provisions regarding the donor's right to reclaim the money, but there would also be (as a result) Medicaid-eligibility repercussions if the relatives ever need to seek Medicaid coverage for nursing home expenses.

Don't forget that two or more 529 plans can be established.

Talk to a lawyer.
posted by yclipse at 4:50 AM on December 8, 2010

Best answer: You can ask relatives to make their contributions directly to the account; my kids' 529 plan statements always comes with forms that would make that easy if you gave them to the relatives. I suspect--but do not know for sure--that if you write the checks from your account it will count as a contribution from you.
posted by not that girl at 5:44 AM on December 8, 2010

Seconding the suggestion of giving relatives the information for the 529 and having them give directly. My kid's 529 includes very clear instructions on how to provide that information out.
posted by Gucky at 9:20 AM on December 8, 2010