The Northern Virginia financial consultants at Incisive Financial Group released a blog discussing the contribution cap for the 529 College Savings Plan.
Fairfax, VA -- (ReleaseWire) -- 12/18/2018 --The Northern Virginia financial consultants at Incisive Financial Group released a blog discussing the contribution cap for the 529 College Savings Plan. The 529 contribution cap can have tax-related consequences if it is exceeded.
Families can begin saving money for their children's college educations by using the 529 College Savings Plan. These plans are sponsored by individual states or educational institutions and allow for monthly savings contributions. When money from these plans is used for college-related expenses, the money can be withdrawn tax-free. There are two types of 529 plans. Pre-paid plans help pay for the cost of in-state tuition for public colleges and universities, including tuition, fees, textbooks, and other expenses. They can be used at public or private schools, though there are more benefits to using them at public institutions. Savings plans, meanwhile, are more flexible and can be used in the same way at either type of college or university. The full value of the plan can be used at any institution, including some outside of the U.S.
People paying into 529 plans may contribute as much as they want per year, though payments over a certain limit are subject to gift taxes. These taxes are applied to transfers of money or property to another person when nothing is received in return. According to federal law, single taxpayers may contribute up to $14,000 per year to 529 plans and still avoid paying gift taxes. In Virginia, contributors can pay up to $70,000 for single taxpayers and then average that amount over five years to avoid gift taxes. Maryland-based contributors are subject to the same limitations. By avoiding the gift tax, your contributions will be less expensive, likely allowing you to contribute more to the plan and boost the account's savings.
Speak to the financial consultants at Incisive Financial Group for more information about 529 College Savings Plans. The company has years of experience in helping clients handle a wide range of savings plans, including the 529 plan, 401(K)s, profit sharing, tax deferred annuity, and more. IFG also offers custom savings packages and financial consulting. The firm can be contacted at 703-260-9625 or online at https://www.incisivefinancialgroup.com/. IFG is headquartered at 4023 Chain Bridge Road, Fairfax, VA 22030.
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