IRS Reviews 529 Plan Rule

The IRS estimates 52 plans spend an average of 81,889 hours, 37 minutes, each keeping track of 529 plan distributions.

The IRS also is reviewing an existing regulation, Election Out of Generation-Skipping Tax (GST) Deemed Allocations, which affects about 25,000 respondents, and an existing form, Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return, Estate of nonresident not a citizen of the United States which affects about 10 respondents.

The GST deemed allocations regulation affects taxpayers who want to pass assets on to recipients who are two or more generations younger than the taxpayers, and to come up with their own strategy for allocating the generation-skipping tax exemption, rather than letting the IRS allocate the exemption automatically. The GST deemed allocations regulation also affect taxpayers who elect to treat certain types of trusts as GST trusts or to cancel GST designations.

The Form 706-NA review affects non-U.S. citizens who live outside the United States and have to compute estate and GST tax liability.