In most cases, there is no practical limit on how much someone can contribute to a 529 account in a given year, yet many financial advisors and media headlines seem to believe otherwise.
In fact, in the experience of the CPA and financial planning expert Jeff Levine, “tons” of other normally reputable people and institutions appear to be under the impression that there is a $19,000 annual contribution limit for 529 accounts. That is not, in fact, the case, and Levine took to LinkedIn this week to set the record straight.
“I don't know why, but every now and then, some piece of wrong financial information gets posted, and then within days, tons of other normally reputable people/institutions ‘randomly' post similar inaccuracies,” Levine observed. “Case in point? This week, I’ve seen a lot of posts about the 529 contribution limit of $19,000. Except that’s not the limit.”
As noted, people can contribute far more than that amount in a given year if they so choose. If they use the right strategies, furthermore, they can do so without generating any gift taxes or eating into their lifetime estate tax exemption limit. So, where does the oft-cited $19,000 limit come from? Levine says there’s one likely answer.
“$19,000 is simply the 2025 annual gift tax exclusion amount, which can be allocated towards a 529 contribution,” Levine observed. “But (for 2025) if someone wanted to contribute more, they could.”
Gift-Splitting and Averaged Giving
For example, if an individual is married, they can use a technique known as “gift-splitting” to contribute up to $38,000 to a 529 account for a single beneficiary without any gift tax — and without using any of their lifetime estate tax exemption.
Alternatively, an individual could use five-year gift averaging to contribute up to $95,000 to a 529 account this year for a single beneficiary, while having the contribution be treated as though it was made over five years. Once again, this approach results in no gift tax being due and no use of the lifetime exemption amount.
Another possibility for married couples is to use both five-year gift averaging and gift-splitting. Doing so allows the couple to contribute up to $190,000 to a 529 account this year for a single beneficiary — yet again without any gift tax and without using any of their lifetime exemption amount.
Funding Multiple Accounts
If they had the resources on hand and didn’t mind generating a tax bill, Levine noted, this couple could essentially contribute any amount they wanted until the account in question reached the maximum amount allowed by the applicable state.
“Currently, New Hampshire has the highest cap in the country, prohibiting new contributions (NOT growth) only when the account balance reaches $621,411,” Levine explained. “But there are also a ton of states that have limits of $500,000 or more.”
Notably, even if $621,411 (or any single state maximum) wasn’t enough and someone wanted to contribute even more to a 529 plan for a single beneficiary, they could theoretically open another 529 plan in another state.
“Missouri has a current cap of $550,000,” Levine observed. “So, if someone wanted, they could contribute $1,171,411 into 529 plan accounts for a single beneficiary using New Hampshire and Missouri’s plans. Is $1,171,411 still not enough? Well, then open a 3rd account in another state. Or a 4th. You get the idea.”
As noted, contributions in excess of the excludable gift amounts would reduce an individual’s remaining lifetime estate and gift tax exemption, but that exemption is currently $13.99 million, and is likely to be even higher next year — and it is effectively double those amounts for married couples. The bottom line, Levine said, is that very few people have that much wealth.
“All of which brings me back to the point that in most cases, there really is no practical limit on how much can be contributed to a 529 plan for a single beneficiary,” Levine concluded. “In most cases, it’s effectively ‘whatever you want.’”
Pictured: Jeff Levine
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