As families look for ways to fund higher education, 529 education savings plans have become a popular choice. As both education costs and student loan debt continue to rise, 529 education savings plans can be a valuable tool.
A contribution to a 529 plan is considered a completed gift from the contributor to the beneficiary for gift tax purposes. Effective January 1, 2024, the federal annual gift tax exclusion increased from $17,000 in 2023 to $18,000 for a single individual and from $34,000 to $36,000 for married couples filing jointly. To empower families and encourage education savings, the Internal Revenue Service (IRS) offers valuable provisions related to gift taxes. For 529 plans, contributions in 2024 of up to $90,000 for a single contributor (or $180,000 for married couples filing jointly) 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 education savings account while utilizing gifting exclusions. With this increase in limit, families can invest more for the next generation.
The Education Plan® is a tax-advantaged 529 education savings plan sponsored by New Mexico that can be used to pay for education expenses at universities, colleges, trade schools, and professional schools throughout the United States. 529 plans offer flexibility, allowing funds to be used for a variety of qualified education expenses including tuition, room and board, books, fees and computer equipment at eligible educational institutions nationwide and even some international schools. Funds may also be used to pay for K-12 tuition and apprenticeship expenses.
"The Education Trust Board is committed to providing options to assist families to save for future education," said Natalie Cordova, Executive Director of the Education Trust Board of New Mexico, the organization that administers The Education Plan®. "A 529 education savings plan is a great way for families to maximize contributions and minimize long-term debt when funding future education.”
For more information on The Education Plan® and its tax advantages, please visit www.TheEducationPlan.com.