Maximizing Funding
- Consider starting early. Allow as much growth as possible.
- Consider utilizing your (or another) state plan tax deduction, or credit as much as possible. You can later transfer the money to where it really needed to be.
- Consider allocating your funds to a more aggressive customized higher percentage stock fund. This will likely over time grow faster, but have more volatility. Be sure you can afford to potentially lose some of these funds.
I want to super fund my children’s accounts, but I want to get the tax break as well. Instead of super funding a large amount of money in one year into one or two children’s accounts, I start accounts for all my nieces and nephews as well as their parents with the promise that I will later help fund their education. I then contribute only to the maximum yearly state tax deduction or credit to each of these extra accounts (In 2026, Utah allows a state tax credit of 4.45% on deposits up to $5120 joint, $2560 filing single per account). I use some of the tax savings to gift my relatives $25 per year for their help, then at some point transfer money back to my own children’s accounts.
If you are fortunate enough to have wealth without yet nearing the estate maximum exemption limits, consider 5 year 529 superfunding up to $190K per beneficiary (file form 709). Use the Unified Lifetime Gift tax Exemption for even more.
Say you want to contribute $200,000 to a 529 for a single grandchild in 2026 as an individual:
The First $95,000 is covered by the 5-year superfunding option. NO gift tax or lifetime exemption is used.
The remaining $105,000 will be counted against your total $15,000,000 lifetime exemption.
No statement or example on this site should be considered a specific recommendation for your personal situation. Investing and tax strategies each carry significant risks. Examples herein may not apply to your situation. Please consult your estate attorney, tax advisor, or financial advisor for personal advice.