Section 529 Plans: Front-Loaded Contributions, Beneficiary Changes, Form 1099-Q and Plan Selection

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, September 29, 2021

Recorded event now available

or call 1-800-926-7926
Course Materials

This course will review the many decisions surrounding Section 529 plans from plan selection and qualifying beneficiaries through making qualified disbursements and reporting Form 1099-Q disbursements on the applicable taxpayer's tax return. Our authoritative panel will discuss beneficiary changes, superfunding a 529 plan, and coordinating these disbursements with other education benefits.

Description

The primary benefit of Section 529 plans is that they are relatively simple to establish and operate, and contributions and earnings can be withdrawn tax-free for qualified education expenses. Although there is no federal tax deduction, most states offer some form of benefit or deduction for these contributions. IRC Section 529(c)(2)(B) does provide some leniency. It permits front-loading these plans. Lump sum contributions of up to $75,000 (five years at $15,000 a year) can be made for a single beneficiary without using a taxpayer's lifetime gift and estate tax exemption.

Crucial decisions must be made by taxpayers participating in these plans. Initially, the donor must decide whether the investment should be made through an adviser or directly to a state plan and, if a state plan, which state? Qualified expenses paid from a 529 plan now include tuition paid for grades K-12 and certain post-secondary institutions in addition to colleges and universities. For certain taxpayers, a ROTH IRA may be a viable alternative to a Section 529 plan.

Listen as our panel of experts explains the operation and tax benefits of 529 plans, including beneficiary eligibility, qualified education expenses, and the related IRS reporting requirements.

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Outline

  1. Section 529 plans
  2. Choosing a plan
  3. Roth IRAs as an alternative
  4. Superfunding a 529 plan and the gift tax return
  5. Beneficiaries
    1. Eligible beneficiaries
    2. Changing beneficiaries
  6. Qualified expenses
  7. Coordination with other education benefits
  8. Tax reporting: Form 1099-Q
  9. State deductions

Benefits

The panel will cover these and other key issues:

  • How to weigh the pros and cons of plans offered by specific states
  • How to handle a 529 plan investment when the designated beneficiary decides not to attend a qualifying education institution
  • Gift tax reporting requirements for super funded 529 contributions
  • How to report distributions reported to the donor, rather than the recipient, on Form 1099-Q

Faculty

Jones, Keith T.
Keith T. Jones, Ph.D., CPA

Professor of Accounting
University of North Alabama

Mr. Jones, PhD, CPA, is a professor of accounting at the University of North Alabama in Florence, AL. He received his...  |  Read More

Pon, Lawrence
Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP

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Pon & Associates

Mr. Pon has been in practice since 1986 providing comprehensive tax and financial planning, tax preparation and...  |  Read More

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