Although the IRS typically allows you to give no more than $13,000 a year (2012 figure) to another person without a federal gift tax, you can contribute up to $65,000 to a 529 plan in one year. A special tax law allows you to aggregate five years of the allowable $13,000 annual gift-tax exclusion (5 x $13,000 = $65,000) to jump-start a 529 plan. While you will not be able to make any further gifts to the 529 plan for five years, compounding will make your earnings grow faster than if you invested $13,000 in each of the five years.
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