Section — Internal Revenue Manual Part 3. Submission

Taxpayers are allowed a contribution to a qualified state tuition plan on behalf of a designated beneficiary. If the taxpayer’s total contributions to a qualified state tuition program on behalf of any individual beneficiary exceed $19,000 for 2025, $18,000 for 2024, then for purposes of the annual exclusion the taxpayer may elect under Section 529(c)(2)(B) to treat up to $95,000 Beginning in 2025, $90,000, Beginning in 2024, of the total contributions as having been made ratably over a five-year period beginning in 2024 for tax year 2024. (These are considered gifts of a present interest.)

The taxpayer is required to report the entire amount of the contribution in excess of $95,000 for the tax year 2025.

The taxpayer makes the election by checking the box B at the top of Schedule A. The election must be made for the calendar year in which the contribution is made.

The taxpayer must also attach an explanation that includes the following: (1) The total amount contributed per individual beneficiary.

(2) The amount for which the election is being made.

(3) The name of the individual for whom the contribution was made.

If the taxpayer makes this election, they are to report only 1/5 (20 percent) of the total contribution(s) (up to $95,000 for 2025), (up to $90,000) on the tax year 2024 Form 709-NA. They must then report an additional 20 percent of the total in each of the succeeding four years, unless they are NOT required to file Form 709-NA, other than to report that year’s portion of the election.