Core Insights - A 529 plan is a tax-advantaged savings account aimed at helping families cover qualified education expenses, with federal tax-deferred growth and tax-free withdrawals for qualified expenses [3][8] - There are two types of 529 plans: prepaid tuition plans, which allow purchasing future tuition at current rates, and education savings plans, which function like investment accounts based on market performance [4] - Contributions to a 529 plan can be made by anyone and must be in cash, with options for online contributions available through certain plans [5][6] Contribution and Tax Rules - Contributions to a 529 plan are considered completed gifts to the beneficiary, qualifying for the annual gift tax exclusion, allowing individuals to give a set amount per recipient annually without incurring federal gift taxes [7][8] - A special five-year election rule permits contributors to make large gifts by front-loading contributions, allowing up to five times the annual exclusion amount in a single year, treated as spread over five years for tax purposes [10] - If total gifts are below the annual gift tax exclusion amount, the account owner does not need to file a gift tax return, even if contributions exceed the IRS limit when made to multiple recipients [9]