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Level 2

Can the 529(c)(2)(B) election be made two years in a row.  For example, if someone contributes the following amounts to a beneficiary's 529 plan:

\$51,000 in 2023

\$36,000 in 2024

Can the 2023 contribution be treated as having been ratably over a five year period starting in 2023?  Can the 2024 contribution be treated as having been ratably over a five year period starting in 2024?  If this is allowed, the total amounts of non-taxable gifts will be:

2023: \$51,000/5  = \$10,200 (Limit is \$17,000)

2024:\$51,000/5 + \$36,000/5 = \$17,400 (Limit is \$18,000)

2025:\$51,000/5 + \$36,000/5 = \$17,400 (Assume limit remains \$18,000)

2026:\$51,000/5 + \$36,000/5 = \$17,400 (Assume limit remains \$18,000)

2027:\$51,000/5 + \$36,000/5 = \$17,400 (Assume limit remains \$18,000)

2028: \$36,000/5 = \$7,200 (Assume limit remains \$18,000)

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7 Replies
Level 10

Level 2

Thank you, M-M Tax!  Per the web-site you quoted, clearly it is allowed.  Can this also be found on the IRS site or somewhere in the tax code?

Level 10

Level 2

Perfect, thanks!

Level 2

In 2024, let's say unmarried donor A makes the following gifts:

• \$30,000 to donee B
• \$3,000 to donee C

Questions:

• I assume 709 will need to be filed as one of the gifts is over the annual exclusion amount of \$18,000. Correct?
• What goes on lines 1, 2, and 3 on Part 4 of Schedule A? (\$33,000, \$36,000 and \$0, respectively)?
• If the previous numbers are correct, then donor A ends up NOT using any of their applicable tax credit amount of \$5,389,800?

If all of this is true, seems a bit odd that a donor can essentially 'offset' a large gift to one donee by 'spreading' the annual exclusion amounts across several donees with small gifts (as low as \$1 even)? Am I missing something? For 709 instructions do not seem to clarify this point. Just trying to understand the gift tax stuff better.

Level 10

Not sure what you're getting at but a 709 would be required for donee B because it's over \$18k.

Donee C's gift of \$3k wouldn't even need to be reported on the 709 at all.

Level 2