The maximum overall contribution to a 529 plan must not exceed the amount necessary to provide for the beneficiary's educational expenses, states the IRS. As of October 2015, there may be a gift tax due if the contributions exceed $14,000 a year, including other cash gifts to the beneficiary.
Contributions to a 529 plan are not tax deductible, but the earnings are not subject to federal tax or, in many cases, state tax, according to the IRS. A 529 plan requires the beneficiary to attend an eligible educational institution to withdraw the funds tax-free. The custodian may change the designated beneficiary to another member of the family without tax consequences.