Wednesday, December 10, 2008

529 college savings plan contribution deadline coming up

I've been planning on setting aside some money for our children's college savings this year, but was uncertain when the deadline is - the answer is 12/31.

It took a while to search the web and find when the actual deadline is.

There's a great morningstar arcticle that discusses it in detail, but the bottom line is that gift tax rules govern the determination of the tax year a 529 contribution is made.

This means that contributions are considered gifts, tax free up to the eligible IRS gift limit (I think it's $12k per spouse per year, for a total of up to $24k). The gift (in the form of cash), falls into the tax year the gift is given - there is legal debate as to when it's cashed, but it seems to be related to intent.


1 comment:

Anonymous said...

MorningStar was written in 2004.
Per to the best that I can read this deadline has been extended to April 15th. Their information is dated 2008 but doesn't say when the deadline change was made. Have you asked your investment advisor?