Under contributed 529 5-years election (lump sum)

[JohnTash]

Last year, we did the 529 lump sum contribution (5-years election) for our 2 kids. But, we forgot that each of us (my wife and I) can contribute $14,000 each and a total of $28,000 for each child. So, we contributed only $140,000 ( 14,000 * 2 kids * 5 years), instead of ( (14,000*2 of us) * 2 kids * 5 years). Can we contribute the other half $140,000 this year using the same 5-years election again?

[Brian_Boswell_SFC]

In short: Yes.

Just to make sure, you wish you'd put in $280,000, since you're married filing jointly and have two accounts in which to put each $140,000 gift.

I'm assuming by "last year" you mean tax year 2015. So if you contributed $70,000 to each child, that would be $28,000 spread out over five years, so you've got another $28,000 this year and each year through 2019. If you contribute an additional $140,000 split between the two accounts, you can claim a second 5-years of forward-funding, with an additional $28,000 allocated towards your gift cap for each beneficiary.

There is nothing you can do about the missed 2015 contribution, but note that you will be eligible to make an additional contribution of $28,000 ($14,000 into each of the two accounts) in tax year 2020, assuming the gift tax limit has not been changed by that time.

Now, all the above said, I'll point you to the disclosure below my signature!

Good luck,

Brian Boswell
VP, Research & Development

This information does not constitute tax advice and is provided for informational purposes only. Please consult your tax advisor, financial advisor, local taxing authority, and/or plan provider or sponsor for more information.

[JohnTash]

Thank you very much for the detail reply! I have another question. My oldest is already in 10th grade. Can we still contribute 529 for 5 years? I am asking because she will be in collage in 3 years and not sure we can do the contribution for the 2 years she will be in college.

Thanks again.

[Brian_Boswell_SFC]

Yes! You can continue to contribute to a 529 throughout college and beyond. There is no expiration, and if you don't use the assets on higher education expenses for your children, you can always change the beneficiary at a later date to your grandchildren down the road.