YES and NO. Contributions are eligible for the $12,000 gift tax exclusion and the generation-skipping tax exemption. <br /> <br /> The limit that one can give to avoid any gift/estate tax consequences is $60,000. The rules let you accelerate five years worth of gifting per individual with the 529 plans. However, it would be wrong to call it a one-time "lump sum" as presumably one could give another $60,000 in year six (i.e. after five calendar years from the time the original $60,000 was gifted into the 529 plan.) In addition, one could in theory gift more than $60,000 - there would just be gift/estate tax consequences. (There may still be no tax owed by one just using up part of one's "Unified Credit" provided one's estate is small enough.) All contributions are removed from your taxable estate. However, if a contributor dies prior to the fifth year, a portion of the contribution will be returned to the contributor's estate for determining taxes.
