Contributing to a grandchild's college education is a wonderful legacy. Grandparents can benefit from outstanding gift and potential estate tax advantages, while retaining control over the plan. You also have the flexibility of changing beneficiaries (new beneficiaries must be a family member of the prior beneficiary).
Gift and potential estate tax advantages
Up to $140,000 per married couple ($70,000 for individual taxpayers) per beneficiary can be contributed to one or more plans in a single year without paying a federal gift tax so long as no further gifts to each beneficiary are made for five years — that’s five times the annual gift tax exclusion. The IRS views the transfer as a $28,000 (if a married couple) contribution made over each of five consecutive years.
Furthermore, assets you contribute to a Franklin Templeton 529 College Savings Plan may not be included in your federal taxable estate.
Tax benefits may be conditioned on meeting certain requirements. 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 the taxable estate. Generation-skipping tax may apply to substantial transfers to a beneficiary at least two generations below the contributor. See the Investor Handbook for more complete information.
Important Legal InformationInvestors should carefully consider plan investment goals, risks, charges and expenses before investing. To obtain an Investor Handbook, which contains this and other information, talk to your financial advisor, go to the Order 529 Literature section on this website, or call Franklin Templeton Distributors, Inc., the manager and underwriter for the plan, at
- Offered and administered by the New Jersey Higher Education Student Assistance Authority (HESAA); managed and distributed by Franklin Templeton Distributors, Inc., an affiliate of Franklin Resources, Inc., which operates as Franklin Templeton Investments. No federal or state guarantee. Principal value may be lost, and investing in the plan does not guarantee admission to college or sufficient funds for college. Please refer to the Investor Handbook for more complete information.
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