Personal Resource Center

Supercharge your college savings with 529 plan superfunding

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Here's how to save more for a single beneficiary: Open a 529 plan in another state and have different family members superfund each plan.

Estate tax benefits

Superfunding can be a strategy to reduce estate taxes. Consider a grandparent with six grandchildren who's worried about being subject to estate tax when they die. With 529 plan superfunding, they can immediately move $80,000 per child out of their estate into a 529 plan for each of the six grandchildren. This moves $480,000 out of their estate but keeps those funds under their control. In five years' time, they can superfund each of those 529 plans again and further reduce their estate.

As federal estate tax limits are always in flux, it's important to have ongoing conversations as appropriate with your tax advisor and estate planning attorney about how 529 plans can reduce your estate tax liability.


What happens if I overfund a 529 plan?

When you make large, lump-sum contributions to an educational account, it's possible that your intended beneficiary won't need all the funds you've saved. In that case, you have a few options:

  • Use the funds for another beneficiary. It's easy to change the beneficiary3 on a 529 plan so the remaining funds can be used by another child or grandchild, or even yourself. Don't forget that up to $10,000 per year4 can be used from a 529 plan for eligible K-12 education, too.
  • Withdraw the balance. You can always withdraw the remaining funds. You'll just be subject to a 10% penalty and income tax,5 and then, only on the earnings not principle.


Should you superfund a 529 plan?

Now that you know the benefits of superfunding, you can ask your tax and financial advisors whether this strategy makes sense for your educational savings and wealth transfer goals. While superfunding isn't the right strategy for everyone, it could be a tool to accelerate savings while enjoying some tax breaks along the way.


529 College Savings Plan investments are offered through Synovus Securities, Inc. Information, including fees, expenses and sales charges on the particular plan you have selected, is available in the offering circular or official statement provided by the plan sponsor. Please read the information carefully prior to investing.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Caitlin See, "Complete List of 529 Contribution Limits for Every State," Student Loan Planner, updated November 1, 2021, accessed December 8, 2021. Back
  2. FINRA, "Common Features of 529 Plans," accessed December 8, 2021. Back
  3. IRS, "Publication 970 (2020), Tax Benefits for Education: Qualified Tuition Plans," accessed December 10, 2021. Back
  4. IRS, "Topic No. 313 Qualified Tuition Programs (QTPs)," accessed December 10, 2021. Back
  5. Saving for College, "What is the penalty on an unused 529 plan?" Published July 14, 2021, accessed December 10, 2021. Back
  6. Farran Powell, Emma Kerr, and Sarah Wood, "See the Average CollegeTuition in 2021-2022," published September 13, 2021, accessed December 15, 2021. Back