Do gift-tax rules apply to college savings plans?
Contributions to 529 savings plans, Coverdell Education Savings Accounts and UGMA/UTMA accounts are subject to gift-tax rules. Under these rules, you can contribute up to $13,000 a year ($26,000 for married couples) without gift-tax consequences. Under a special election, you can invest up to $65,000 ($130,000 for married couples) to a 529 account at one time by accelerating five years worth of investments with no federal gift-tax consequences. If you make this election, additional contributions or other gifts to the same individual over that five-year period will exceed the annual gift-tax exclusion.
