Question

Is a contribution to a qualified tuition plan (a code section 529 plan) is treated as a gift is a present interest

Answer 1

Answer

Qualified tution plan

Qualified tuition plan (QTP), called as a section 529 plan, is a plan established by a  state, or an agency or instrumentality of a state, that allows a contributor either to prepay a beneficiary's qualified higher education expenses at an eligible educational institution or to contribute to an account for paying those expenses..

Eligible institutions for 529 plan

An eligible educational institution are any college, university, vocational school, postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education.

All contributions to 529 plans are considered present interest gifts and qualify for the annual federal gift tax exclusion which means one can contribute up to $14,000 per year, per beneficiary without incurring federal gift tax. So, if one  contribute $18,000 to their beneficiary 529 plan in a given year, ordinarily apply this gift against your $14,000 annual gift tax exclusion. The remaining $4000 would be a taxable gift and one can  report it on a federal gift tax return.