Grandparents often look for ways to leave a lasting legacy. While toys and clothes are quickly outgrown, the gift of a debt-free education lasts a lifetime.

For Ohio residents, the Ohio 529 Plan (CollegeAdvantage) offers a “superpower” known as Superfunding that can help you move a significant amount of money out of your estate and into a tax-advantaged account for your grandchildren.

Here is everything you need to know about how this works in 2026.

What is Superfunding?

Normally, you can give up to $19,000 per year (the 2026 annual gift tax exclusion) to any individual without having to report it to the IRS. “Superfunding” is a special IRS rule (5-year gift tax averaging) that allows you to front-load five years’ worth of gifts into a single year.

That means individuals can contribute up to $95,000 at once and married couples can contribute up to $190,000 at once.

By doing this, you treat the gift as if it were spread out over five years for tax purposes, allowing the entire lump sum to start compounding tax-free immediately.

The “Ohio Advantage”: Why It’s Better for You

While superfunding is a federal rule, Ohio residents get a “bonus” at the state level. Ohio offers one of the most generous 529 tax deductions in the country:

• The $4,000 Deduction: Ohio taxpayers can deduct up to $4,000 per year, per beneficiary from their state taxable income.
• Unlimited Carry-Forward: This is the “secret sauce” for Ohioans. If you superfund $95,000 today, you can only deduct $4,000 this year. However, Ohio allows you to carry forward the remaining balance to future years indefinitely. You can keep taking that $4,000 deduction every single year until your entire contribution has been deducted.
• You Don’t Have to Own the Account: In Ohio, any taxpayer who contributes to an Ohio 529 can take the deduction. Even if the parents own the account, you can use the “Ugift” code to contribute and still claim your state tax break.

3 Reasons to Superfund in 2026

The End of the “Grandparent Trap”

In the past, many grandparents hesitated to save in their own names because withdrawals from grandparent-owned accounts were treated as student income, which could hurt financial aid eligibility. That rule is gone. Under the new FAFSA rules, grandparent-owned 529s do not impact federal student aid eligibility at all.

Estate Planning and Control

Superfunding allows you to remove a large sum from your taxable estate immediately. However, unlike a traditional gift, you keep control. You decide when the money is spent, and if your grandchild decides not to go to college, you can change the beneficiary to another family member (or even yourself).

Tax-Free Growth

The earlier you put the money in, the more time it has to grow. Because 529 earnings are never taxed (if used for education), a $190,000 “superfunded” deposit by a married couple when a grandchild is born could potentially grow to cover the entire cost of a four-year degree by the time they are 18.

Let’s assume that the $190,000 superfunded contribution grows at a 7% annual rate of return. That initial investment could grow to approximately $642,187 by the time the child is ready for their first year of college at age 18.

• The Power of Time: By superfunding at birth, you maximize the “time in the market.” In this scenario, the account grows by over $450,000 without you ever having to add another penny.
• Tax Efficiency: Because this is in a 529 plan, that entire $450,000 in growth is completely free from federal and state income taxes when used for qualified education expenses.
• Ohio Tax Shield: For the grandparent, this isn’t just a gift for the child—it’s a long-term tax strategy. By carrying forward the Ohio state tax deduction, a married couple could potentially deduct $8,000 from their Ohio taxable income every year until the full $190,000 is accounted for (nearly 24 years of deductions).

Important “Rules of the Road”

Of course, as with anything good, there are pitfalls to watch out for like:

• The 5-Year Survival Rule: If you superfund and then pass away before the five-year period is up, the portion of the gift allocated to the remaining years is technically moved back into your taxable estate.
• IRS Form 709: You must file a federal gift tax return (Form 709) in the year you make the contribution to “elect” the five-year treatment. This is a reporting requirement, not a tax payment.
• No “Double Gifting”: If you superfund $95,000 this year, you have “used up” your gift allowance for that grandchild for the next five years.

How to Start

If you’re an Ohio resident, the best place to start is CollegeAdvantage.com. You can open an account in minutes with as little as $25, but for those looking to make a major impact, the superfunding strategy is the most efficient way to jumpstart a grandchild’s future.

Want to dig deeper into the superfunding strategy? Schedule some complimentary time with me to discuss.