Question

Do gift tax rules apply to 529 plans?

a) Yes, contributions to a 529 plan are subject to gift tax.
b) No, 529 plan contributions are exempt from gift tax.
c) Only if the contributor is a non-relative.
d) Only if the 529 plan beneficiary is over 18 years old.

Answer 1

Gift tax rules do not apply to 529 plans.

Step-by-step explanation:

Gift tax rules do not apply to 529 plans. Option b) No, 529 plan contributions are exempt from gift tax is the correct answer.

A 529 plan is a tax-advantaged college savings plan that allows individuals to save for education expenses. While there are limits to how much can be contributed to a 529 plan without incurring gift tax, the contributions themselves are not subject to gift tax.

The primary topic of this question is tax rules related to 529 plans.