Question for the Money Doctors
Question submitted on Mar 23, 2011.
QuestionI am not clear about the limits on the total value of a 529 Plan account. Please elaborate on how this applies to earnings. For example, if I put $100,000 into a 529 Plan account, can I keep it intact as it grows to $500,000 or a $2,000,000? Or, am I expected to withdraw when it grows to a certain amount?
Once the value of the account (both contributions and earnings) hits the specific state's plan limit, you will not be permited to make any additional contributions to the plan. However, I don't believe that you will be "forced" to take anything out, you just won't be able to make any further contributions.
Also, be aware of the gift tax consequences of any contributions greater than the annual gift tax exclusion limit, which is currently $13,000 per donor per donee.
For additional information visit http://www.360financialliteracy.org/