529 Plans Before December 31: A Year-End Checklist

• 1. Your state’s deduction deadline
• 2. Gift tax room for family members
• 3. Match withdrawals to expenses in the same year
• 4. Do not double-dip with education credits
• 5. Leftover money
• How much to aim for
• Free tools

If you save for a child’s education in a US 529 plan, a few things are worth checking before the year closes.

§1. Your state’s deduction deadline

Many states give a state income tax deduction or credit for 529 contributions, and most require the money to arrive by December 31 to count for this tax year. A few states allow contributions up to the filing deadline in April. Some states give the benefit only if you use the in-state plan. Check your own state’s rules and leave a few days for the transfer to settle.

§2. Gift tax room for family members

Contributions count as gifts to the beneficiary. For 2026 the annual gift tax exclusion is $19,000 per giver per beneficiary, so two grandparents can each give that amount without filing a gift tax return. A special 5-year election allows front-loading up to five years of exclusions at once (this needs a gift tax return).

§3. Match withdrawals to expenses in the same year

If you paid tuition, fees, books or room and board this year, take the matching 529 withdrawal in the same calendar year. Withdrawals that do not line up with qualified expenses in that year can be taxable on the earnings and may carry a 10% penalty.

§4. Do not double-dip with education credits

Expenses used for the American Opportunity Tax Credit cannot also be paid with tax-free 529 money. Families often pay about $4,000 of expenses from other funds to claim the full credit and use the 529 for the rest.

§5. Leftover money

If a beneficiary needs less than planned, you can change the beneficiary to another family member. Since 2024, a limited rollover to the beneficiary’s Roth IRA is also possible (account open at least 15 years, lifetime cap of $35,000, within yearly IRA limits).

§How much to aim for

Pick a share of expected costs rather than 100%. Covering a third or half from savings, with the rest from current income, scholarships and aid, is a common target that keeps retirement saving on track.

§Free tools

• 529 college savings calculator: https://smartbudgetsheets.surge.sh/calculators/529-college-savings-calculator/?utm_source=nostr
• Savings goal calculator: https://smartbudgetsheets.surge.sh/calculators/savings-goal-calculator/?utm_source=nostr
• Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=nostr
• 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=nostr

General information, not financial advice. Figures are rounded examples.