Santa Fe, NM – December 27, 2022 – Effective January 1, 2023, the federal annual gift tax exclusion increases to $17,000 for a single individual and $34,000 for married couples. For 529 plans, contributions of up to $85,000 for a single contributor (or $170,000 for married couples) can be made in a single year and applied against the annual gift tax exclusion equally over a five-year period. This is another great way to jumpstart a child’s or grandchild’s college savings account while utilizing gifting exclusions.
“This increase by the IRS comes at a pivotal time when tuition rates are increasing, and many are discussing and planning for the rising costs of higher education,” said Natalie Cordova, Executive Director of Education Trust Board of New Mexico, the organization that administers The Education Plan®, New Mexico’s 529 education savings plan. “With this change, parents, grandparents and loved ones can now invest more for the next generation.”
Studies show that students with as little as $500 saved for education are three times more likely to attend college and four times more likely to graduate, and with higher education linked to higher salaries, greater employment opportunities, and increased future success, saving for education expenses is a vital investment. The Education Plan® can also be used as a tool for estate planning while empowering future generations and helping to eliminate student loan debt. Contributions to a 529 account for a beneficiary are considered gifts, however the account owner retains full control over the account throughout their lifetime.
The Education Plan® offers additional tax benefits. Contributions are tax-deductible on some state income tax returns, earnings grow free of state and federal taxes, and withdrawals are tax-free when funds are used to cover qualified education expenses at universities, community colleges, trade schools, or vocational schools across the United States.
To learn more about The Education Plan® or to open an account today, visit TheEducationPlan.com.