529 contribution options for friends and family

Anyone, even the beneficiary or an organization, can contribute to a CollegeAmerica account. While the account owner can access the account and contribute online via Automated Clearing House (ACH), friends and family have options to contribute too.

Contribution options for friends and family

• Checks — Contributors should make their checks payable to CollegeAmerica, include the account number and investment instructions and mail the check to the closest service center
• Bill pay — This option can be set up directly with a bank. Designate CollegeAmerica as the payee and provide the account number and fund name(s) or number(s) from a quarterly statement.
• College savings gift cards and rewards programs — Capital Group also participates in many third-party college savings programs. Confirm the requirements with the program provider.

Important reminders:

• Investment instructions — While anyone can contribute to a CollegeAmerica account, it is the responsibility of the account owner and their financial professional to decide the funds/investment strategy for the money
  
  
• Gift-tax considerations — Contributions to CollegeAmerica accounts are considered gifts by the Internal Revenue Service (IRS) and may be subject to gift taxes. Consult a tax advisor for more information about gift taxes.
  
  Individuals can contribute up to $18,000 ($36,000 for married couples) annually without gift tax consequences. Under a special election, one can invest up to $90,000 ($180,000 for married couples) at one time by accelerating five years’ worth of investments. No additional gifts can be made to the beneficiary over the four years following the year in which the one-time gift is made. If the donor of an accelerated gift passes away within the five-year period, a portion of the transferred amount will be included in the donor’s estate for tax purposes. Consult with a tax professional regarding your specific situation.

What to expect at tax time

CollegeAmerica contributions are not deductible from federal income taxes and do not have to be reported, so a tax form is not sent for contributions into the account. Depending on a state’s tax regulations, you may be able to deduct some or all of your contributions from state taxes. Tax-advantaged treatment applies to savings used for qualified education expenses. State tax treatment varies.

Earnings in a CollegeAmerica account are exempt from federal taxes if distributions are used for qualified expenses. Consult a tax advisor for more information on federal and state tax implications.