Gift tax center

Example 2

The facts are the same as Example 1, except that John does not receive Mary’s consent to split gifts. Since John’s 529 contribution for Stephen exceeds his $14,000 annual gift exclusion, a taxable gift of $6,000 is created, unless the five-year election is employed to reduce the gift. (Even if a $6,000 taxable gift is reported, John would probably not have to actually make a tax payment, as he has a $5.25 million lifetime exemption to apply against cumulative taxable gifts.)

John decides to make the five-year spreading election for his 529 contributions to Stephen’s 529 account. The effect of this election is to reduce his gifts to Stephen in 2013 to $4,000 ($20,000 divided by five). Since this gift is now below the $14,000 annual exclusion, John has no taxable gifts in 2013. However, John is now considered to have made a gift of $4,000 to Stephen in each year 2013 through 2017, and that amount must be factored in when determining if John has any taxable gifts to report in any of those future years.

See Filled-in Form 709 HERE.

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Ameriprise Financial instructions

Consult with your office/branch manager for instructions.

Commonwealth Financial instructions

Commonwealth Financial Advisors, you will find your portal on CommunityLink in the Financial Planning Playbook under Education Planning Tools.

LPL Financial instructions

Visit the Education Planning page in the LPL BranchNet Resource Center to access your portal.

Morgan Stanley instructions

Visit Tools and Forms in the Education Savings Products page in 3DResources to access your portal.

Raymond James instructions

Visit the 529 Plan Resource Center on RJ Net to access your portal.

RW Baird instructions

Visit the 529 Department page on BairdWeb to access your portal.


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