While You’re Thinking Taxes, Think 529
1Non-qualified withdrawals are taxable as ordinary income to the extent of earnings and may also be subject to a 10% federal income tax penalty. Such withdrawals may have state income tax implications.
2Assumes donor makes no other gifts during that period. If the donor elects to treat a gift as being made over five years, and the donor dies prior to the end of the that 5-year period, the portion of the gift allocable to the period after the donor's death will be included in the donor's estate.
3If the donor elects to treat a gift as being made over five years, and the donor dies before the end of the five year period, the portion of the gift allocatable the period after the donor's death will be included in the donor's estate. Estate tax treatment may differ by state. Any additional gifts given to the same designated beneficiary in the five year period will be subject to federal gift tax. Consult with your tax advisor for more information.
This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.