Gift and Estate Tax Treatment

Gift and Estate Options

529 plans offer outstanding gift and estate tax advantages to account owners.

An annual contribution of up to $70,000 (or $140,000 if from a married couple) can be contributed to one or more accounts in a single year without owing federal gift tax, so long as no additional gifts to that beneficiary are made for 5 years--that's 5 times the annual exclusion from taxable gifts!

For example, the IRS considers the transfer as a $28,000 (if a married couple) contribution made each year of 5 consecutive years.

Furthermore, assets you have contributed to an NJBEST 529 College Savings Plan may not be included in your federal taxable estate.



Tax benefits are conditioned on meeting certain requirements. Federal income tax, a 10% federal tax penalty, and state income tax and penalties may apply to nonqualified withdrawals of earnings. Generation-skipping tax may apply to substantial transfers to a beneficiary at least two generations below the contributor. Gift examples are general; individual financial circumstances and state laws vary--consult a tax advisor before investing. If the contributor dies within the five-year period, a prorated portion of contributions may be included in their taxable estate. See the 529 Plan Disclosure Document for more complete information.

Investors should carefully consider plan investment goals, risks, charges and expenses before investing. To obtain the Investor Handbook , which contains this and other information, call Franklin Templeton Distributors, Inc., the manager and underwriter for the plan, at (877) 4NJ-BEST. You should read the Investor Handbook carefully before investing and consider whether your or the beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in its qualified tuition program.