How Much to Contribute to an NC 529 Account and 3 Tips for Making Contributions

An NC 529 Account can be a powerful tool to save for K–12 tuition and college costs. As an investment in the future, the money grows tax-free when it’s used for qualified education-related expenses. Getting started is as easy as investing $25, but figuring out how much to contribute to a 529 account can be a challenge for many trying to save for education.

How To Contribute

There is no set limit on how often you can contribute to a 529 account, but there are three main ways to contribute. You can utilize the following suggestions as they work best for your situation and finances. Keep in mind that the more money you save, the more opportunity the funds will have to compound and grow.

1. Monthly: Monthly contributions to an NC 529 Account can make investing an easy and seamless process. Contributions can be set up as automatic withdrawals through an Automated Clearing House (ACH) draft, an employee payroll deduction, or by check through your financial institution’s bill-payment service.
2. One-Time: One-time contributions can be made at any time. Whether you get a bonus at work, have a windfall inheritance, or just have a little extra money to contribute, these can be great options to continue to grow capital.
3. With the Help of Others: Anyone can contribute to an NC 529 Account, including friends and family members. Instead of birthday presents or holiday gifts, loved ones can gift education funds. It’s easier than ever with NC 529’s gifting option.

How Much To Contribute

Aside from how to contribute, many people wonder about contribution limits. Common questions include: How much can you put in a 529 per year? How much can I contribute to a 529 plan?

The answer to these questions is pretty straightforward. Currently, the contribution maximum is set at $550,000 per beneficiary, which combines all accounts held for the same beneficiary regardless of who started the account. A single person can contribute up to $17,000 a year (in 2023) to a child's NC 529 Account without incurring federal gift tax. A married couple can contribute $34,000 to a single account in 2023.  We recommend contributing what you can when you can.

Financial advisors recommend saving about one-third of estimated college costs per child. Depending on the school they choose to attend, that number can vary greatly. To determine how much to contribute to 529 plans for your children, use the College Savings 529 Plan Calculator. This is a perfect tool to estimate how much to save, as you can input your child’s age and the type of institution they may attend and customize how much you can afford to put away each month.

3 Tips for Making Contributions

Now that we’ve discussed how much to contribute to 529 accounts, there are a few ways to maximize your contributions.

1. Frontload if you can. Frontloading an account is starting with as large of a contribution as possible to take advantage of compound interest. Currently, you can contribute five years’ worth of contributions (up to $170,000 per beneficiary for married couples) without having to pay a gift tax. Frontloading is a popular option for grandparents during estate planning. You should consult your tax or financial consultant to confirm this option is right for you.
2. Gifting from friends and family. Kids outgrow toys and clothes, but education is a gift they’ll never outgrow. Think of it as a way of crowdsourcing for your child’s education. Again, the more money in the pot, the more growth potential it has.
3. Regular contributions. Regular contributions can be a key to saving the amount you’ll need by the time your child heads off to college. By setting up an employee deduction or regular contribution through your financial institution, you can maintain the consistency of contributions. Think of it as another bill to be paid each month, but this bill is one you get back in the future. In a sense, you’re paying yourself or your child with every regular contribution.

Saving for education does not have to be done alone, and it can happen over time. Open an NC 529 Account to get started saving for K–12 education and college expenses.