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Subject Author Date
529 Plan Transfer of Ownership jay1000 06-27-2007
Posted by Stuart Bronstein on July 4, 2007, 10:57 pm
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> Stuart Bronstein wrote:

>> There's no five year rule. There is a lifetime exclusion.
>> You can give up to a total of $1,000,000 that is supposed to
>> appear on gift tax returns before any tax is due.

> A deposit to the 529 has a 5 year look ahead, so one can put
> in $60 and not tap the $1M lifetime gifting credit. If you
> are suggesting this is ignored for transfer of beneficiary,
> that may be. But 529s have a five year rule. There seem to
> be a number of specific details that are either unadressed
> or not well publicized, I think this is one of them.

Thanks. I hadn't read the title of the thread and thought
you were talking about gifts in general.

Stu

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Posted by jay1000 on July 4, 2007, 10:57 pm
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> Stuart Bronstein wrote:
>>> Ira Smilovitz wrote:

>>>>> "From Commonwealth of Virginia 529 College Savings Plan
>>>>> Program Description
>>>>>
>>>>> Can I transfer ownership of the account?

>>>> Wouldn't transfer of ownership be subject to gift tax
>>>> considerations?

>>> Agreed, but wouldn't this transfer be subject to the same 5
>>> year rule (that you can gift up to 5 years' worth or $60K
>>> and while you must file a gift tax form, there is no tax
>>> due)?

>> There's no five year rule. There is a lifetime exclusion.
>> You can give up to a total of $1,000,000 that is supposed to
>> appear on gift tax returns before any tax is due.

> A deposit to the 529 has a 5 year look ahead, so one can put
> in $60 and not tap the $1M lifetime gifting credit. If you
> are suggesting this is ignored for transfer of beneficiary,
> that may be. But 529s have a five year rule. There seem to
> be a number of specific details that are either unadressed
> or not well publicized, I think this is one of them.

The 5 year rule is another interesting feature of 529's.
Assuming that this feature has NOT been used, are there any
tax consequences to a transfer of ownership of a plain
vanilla 529?

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Ira Smilovitz on July 3, 2007, 3:58 am
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>> Ira Smilovitz wrote:

>>>> "From Commonwealth of Virginia 529 College Savings Plan
>>>> Program Description
>>>>
>>>> Can I transfer ownership of the account?

>>> Wouldn't transfer of ownership be subject to gift tax
>>> considerations?

>> Agreed, but wouldn't this transfer be subject to the same 5
>> year rule (that you can gift up to 5 years' worth or $60K
>> and while you must file a gift tax form, there is no tax
>> due)?

> There's no five year rule. There is a lifetime exclusion.
> You can give up to a total of $1,000,000 that is supposed to
> appear on gift tax returns before any tax is due.

There is a five year rule with regard to contributions to a
529 plan. You can lump five years of contributions into a
single year and not trigger the gift tax as long as you do
not make any additional gifts to that individual for the
five year period.

Ira Smilovitz

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Rich Carreiro on July 1, 2007, 6:06 pm
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[talks about changing the "Account owner" of a 529 plan]

> My understanding is there are no tax consequences unless it
> is an "abusive" transfer. Can anyone suggest the
> circumstances under which there would be tax consequences?

Well, if the account is worth more than $12,000, I believe
there will be gift tax consequences (a gift tax return would
have to be filed even if (as would be likely) no gift tax
due).

--
Rich Carreiro rlcarr@animato.arlington.ma.us

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by A.G. Kalman on July 4, 2007, 10:57 pm
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Rich Carreiro wrote:

> [talks about changing the "Account owner" of a 529 plan]

>> My understanding is there are no tax consequences unless it
>> is an "abusive" transfer. Can anyone suggest the
>> circumstances under which there would be tax consequences?

> Well, if the account is worth more than $12,000, I believe
> there will be gift tax consequences (a gift tax return would
> have to be filed even if (as would be likely) no gift tax
> due).

I may be confused but the donee of a 529 (QTP) plan is the
beneficiary. When one makes a contribution to a QTP the
rules relating to gift taxes are based on the donor making a
completed gift to the donee (beneficiary). I don't see how
there would be gift tax implications just because the owner
(trustee) is changed.

Now, if the new owner changes the beneficiary there could be
gift tax implications. Here is the paragraph in Sec. 529:

(B) Treatment of designation of new beneficiary.--
The taxes imposed by chapters 12 and 13 shall apply
to a transfer by reason of a change in the designated
beneficiary under the program (or a rollover to the
account of a new beneficiary) unless the new
beneficiary is--
(i) assigned to the same generation as (or a
higher generation than) the old beneficiary
(determined in accordance with section 2651), and
(ii) a member of the family of the old beneficiary.

In other words, the new beneficiary would have to be a
member of the same family and either of the same generation
or younger or gift taxes would come into play.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

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