529 contributions
There is no deadline.
Note: Contributions count as gifts in the year they are made. For a contribution to count as a gift in a certain year, it must be made by December 31.
Yes, contributions to CollegeAmerica accounts are considered gifts by the Internal Revenue Service (IRS) and may be subject to gift taxes.
The amount the IRS permits to be excluded from the gift tax during a given year is based on the contributor’s tax-filing status. The gift tax exclusion limits for 2026 are:
Tax-filing status |
2026 limits |
|---|---|
| Single | $19,000 |
| Single, with 5-year election* | $95,000 |
| Married, filing jointly | $38,000 |
| Married, filing jointly with 5-year election* | $190,000 |
* The 5-year election allows a contributor to gift up to their limit during 1 calendar year and treat the gift as having been made over 5 years. Additional gifts made to that beneficiary over the next 4 years may reduce the contributor’s lifetime gift and estate tax exemption. If the contributor of an accelerated gift dies within the 5-year period, a portion of the transferred amount will be included in the contributor’s estate for tax purposes.
Consult a tax advisor regarding your specific situation.
A permissible change of beneficiary will be treated as a gift from the previous beneficiary to the new one if the new beneficiary is 1 or more generations younger than the one being replaced. However, if the new beneficiary is more than 1 generation younger, the generation-skipping transfer tax may be triggered.
Consult a tax advisor regarding your specific situation.
No, contributions to CollegeAmerica accounts are made with after-tax dollars; however, earnings can grow free from federal income tax.
Many states offer their residents some form of income tax deduction or credit for contributions made to a 529 savings plan. Consult a tax advisor for state-specific deductions.
529 exchanges
A strategy change is a change in the allocation of funds within a CollegeAmerica account, including:
- One-time exchanges
- One-time rebalances
- Establishing an automatic exchange plan or automatic rebalance plan on an existing funded account
- Modifying or removing an automatic exchange plan or automatic rebalance plan after it has drafted at least once
The Internal Revenue Service allows investors to perform 2 strategy changes per calendar year. Any subsequent changes within the same year are:
- Treated as nonqualified distributions and subject to taxes and penalties
- Reported on Form 1099-Q
Yes, a one-time exchange or adding an automatic exchange plan is considered a strategy change. Once an automatic exchange has drafted, updating or removing the plan is also considered a strategy change. Two strategy changes are permitted by the Internal Revenue Service per calendar year.
Yes, multiple exchanges are considered a single strategy change if they are performed on the same calendar date.
Yes, a one-time rebalance of shares or adding an automatic rebalance plan is considered a strategy change. Once an automatic rebalance plan has drafted, updating or removing the plan is also considered a strategy change.
If more than 2 strategy changes occur in the same calendar year, they are treated as distributions. They are reported on Form 1099-Q and can be:
- Viewed as nonqualified distributions
- Subject to applicable taxes and penalties
Consult a tax advisor regarding your specific situation.
529 distributions
CollegeAmerica funds can be withdrawn free from federal tax for a wide range of qualified education expenses. These include tuition and fees for college, graduate school and vocational and trade schools as well as a variety of noncollege educational and occupational training expenses. For additional information about qualified expenses, as well as the tax implications of taking a nonqualified distribution, review CollegeAmerica 529 qualified expenses.
If distributions are used for purposes other than qualified education expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. States take different approaches to the income tax treatment of distributions. For example, distributions for K-12 expenses may not be exempt from state tax in certain states. Consult a tax advisor for state-specific details.
Yes, IRS Form 1099-Q, which reports the total amount of distributions in a given year, will be issued in January of the year following the distribution.
If the money is used for qualified education expenses, any earnings on distributions are exempt from federal taxes.
The reporting SSN is based on who the money is payable to:
- Distributions payable to the account owner or a third party are reported under the account owner’s SSN.
- Distributions payable to the beneficiary or the school are reported under the beneficiary’s SSN.
No, the account owner can use a CollegeAmerica account to pay for qualified education expenses at an eligible educational institution in any state.
Effective July 1, 2026, CollegeAmerica accounts are no longer subject to a time limit on when funds must be used.
There is no minimum level of study, however if the student is enrolled on a less-than-half-time basis, distributions for room and board will not be considered qualified.
Review IRS Publication 970, Tax Benefits for Education or consult a tax advisor.
Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state's 529 plan, investors should consult a tax advisor. CollegeAmerica is a nationwide plan sponsored by Commonwealth Savers.