One value for many families is education. Unfortunately, it now takes a tribe to save and plan for the growing cost of education! This holiday season, if you want to sidestep the mountain of toys that inevitably accumulate, or if you just can’t think of anything to get a picky teenager, we have a gift idea for you that prioritizes sending your kids to college.
A New Gift Idea: 529 Plan Contributions
You don’t have to abandon all of your traditional gifts! We are only suggesting cutting back to a toy or two and also making a contribution to a child’s long-term future. Spoil your kids or grandkids, by all means, but also give the gift that keeps on giving — contributions toward continuing their education.
Ugift ® has made it easier to gift money directly to 529 plans at no cost to the giver or the receiver. Parents log in to their 529 plan, like Ohio’s CollegeAdvantage, and search for Ugift®. The plan will provide you with a unique code that parents can then in turn share with family and friends. Some 529 plans even allow you to create an event for a specific celebration.
Once they have the code, the family and friends can visit www.ugift529.com, plug in the unique code, and make a gift securely from their bank account directly into the child’s plan without any checks to write or account numbers to share. Gift minimum and maximum amounts are determined by the 529 plan itself. A Ugift® code is good for the life of the plan and can be used repeatedly.
For grandparents (and parents too), some states provide tax benefits for 529 contributions. In Ohio for example, grandparents can claim a $4,000 tax deduction for each gift given to a 529 plan per year per beneficiary–that’s $4,000 per child!
Grandparents have many things to consider when they want to contribute to their grandchild’s college education.
An earlier blog talked about some things to keep in mind when the child might be a need-based candidate so as not to jeopardize their financial aid. In addition, grandparents need to always put their own retirement needs first. Don’t jeopardize their own money needs because they want to help their grandkids. Finally, grandparents should consider some estate planning tips when thinking about larger gifts.
But for those holiday celebrations, Ugift® is an easy way to give a meaningful gift. Other family members and friends may like to have the option too! A simple “in lieu of gifts” mention on an invitation would do the trick.
Feeling weird about asking for money in this way?
Welcome to the club! In our culture, it is considered impolite to talk about money. An open conversation with your parents (your child’s grandparents) is the first step. They may be thinking about it and not know how to start the conversation themselves.
We all see the stories about college graduates with massive student loans. Saving early and often can go a long way toward minimizing debt. Every little bit helps!
Originally Posted: January 2017
Updated Post: November 2022
