How much can you contribute to a 529 plan in 2022?

Facebook icon Twitter icon Print icon Email icon
Kathryn Flynn

By Kathryn Flynn

March 29, 2022

In this article

Annual 529 contribution limits

In 2022, many families are trying to make the most of their tax-advantaged savings accounts. Those saving for retirement may deposit up to $6,000 to an IRA or Roth IRA ($7,000 if you’re over age 50) and up to $19,500 to an employer-sponsored 401(k). But what about college funds? That’s where it can get tricky, since the IRS doesn’t specify annual 529 contribution limits and many 529 plans offer high total contribution limits.

Most families won’t have to worry about hitting their 529 plan’s contribution limit this year.  However, there are some rules to be aware of if you’re considering making a large deposit.

Wondering how your 529 plan may impact financial aid? Use our Financial Aid Calculator to estimate the expected family contribution (EFC) and your financial need.

Annual gift tax exclusion

One of the many benefits of saving for a child’s future college education with a 529 plan is that contributions are considered gifts for tax purposes. In 2022, gifts totaling up to $16,000 per individual will qualify for the annual gift tax exclusion, up from $15,000 in 2018-2021. This means if you and your spouse have three grandchildren (or children) you can jointly give $96,000 without gift-tax consequences, since each child can receive $16,000 in gifts from you and $16,000 in gifts from your spouse. Remember, the annual gift tax exclusion amount also includes non-529 gifts so be sure to include any cash or property gifts in your total.

If your total gifts to an individual will be more than $16,000 this year, the excess amount will count against your lifetime estate and gift tax exemption and will have to be reported on Form 709 when you file your taxes. In 2022 individuals can gift up to $12.06 million without having to pay federal estate or gift tax. There is no joint gift-tax return, so you and your spouse will each have to file separately.

The 5-year election

Individuals may contribute as much as $80,000 to a 529 plan in 2021 if they treat the contribution as if it were spread over a 5-year period. The 5-year election must be reported on Form 709 for each of the five years. For example, a $50,000 529 plan deposit in 2022 can be applied as $10,000 per year, leaving $6,000 in unused annual exclusion per year. 

This is often called 5-year gift tax averaging or superfunding. 

This is often a great estate-tax planning strategy for parents and grandparents. They’re able to shelter a large amount of assets from estate taxes, while retaining control of the funds in the 529 account. However, if you do end up changing your mind down the road and revoking the funds in the account they will be added back to your taxable estate.

Lifetime gift tax exemption amount

Does this mean if you contribute more than $16,000 in one year or $80,000 over five years you’ll have to pay gift tax? Not necessarily. As mentioned above, any gifts above the annual exclusion amounts will have to be reported on the federal tax Form 709, and these will be counted against the $12.06 million lifetime gift tax exclusion. Any amounts that exceed the exclusion could trigger gift taxes of up to 40%, but individuals within the $12.06 million limit will not be subject to gift taxes.

529 plan aggregate limits

Unlike IRAs or 401(k)s, there are no annual contribution limits for 529 plans. However, there are maximum aggregate limits, which vary by plan. Under federal law, contributions to a 529 plan cannot exceed the expected cost of the beneficiary’s qualified higher education expenses. Limits vary by state, ranging from $235,000 to $550,000. This amount represents what the state believes to be the full cost of attending an expensive school and graduate school, including textbooks and room and board. If your plan balance is close to the limit don’t worry about future earnings in the account pushing it over. The funds can remain in the account without penalty, but the family will not be able to make any future contributions unless a market drop brings the account balance back down.

529 plan state income tax benefits

Over 30 states, including the District of Columbia, currently offer a state income tax credit or deduction up to a certain amount. For example, contributions to a New York 529 plan of up to $5,000 per year by an individual or $10,000 per year by a married couple filing jointly are deductible in computing state income tax. But that doesn’t mean New York parents are limited to contributing $10,000 to their 529 plan. If the couple chooses to take advantage of the annual gift tax exclusion and deposits $16,000 this year, the entire amount will grow federal tax-free, but only the first $10,000 may be deducted from their state taxable income.

Next Steps

A good place to start:

See the best 529 plans, personalized for you

Upromise allows you to earn cash back to your 529 plan by shopping through their online portal, dining out, or signing up for their cash back credit card. CollegeBacker  has a shopping portal and a gifting page for family and friends to contribute to your college fund. 

At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.

A good place to start:

See the best 529 plans, personalized for you