How to build grads’ college savings
Ready or not, graduation season has arrived. Parents, friends and family of high school graduates, listen up …
Don’t waste time searching for the perfect graduation gift or writing another check. Instead, consider adding money directly to the graduate’s college savings account. It ensures the money gets put to good use on something meaningful and can grow over time.
How social gifting works
Building college savings through social gifting is smart. Many 529 plans now have online tools that make it easy for savers to ask friends and families to contribute toward college funds.
For example, several plans offer Ugift®, such as the Learning Quest® 529 Education Savings Plan. It allows account owners (typically parents) to share a code via social media, text or email, which links directly to their child’s college savings fund. The code doesn’t expire and can be used throughout the life of the account. Gift givers (family and friends) simply enter the code on a secure site and make their contribution. You don’t have to register or pay a fee.
Many plans have certificates that can be printed and given to graduates to show a gift was made in honor of their future.
It’s a win-win
Parents can now have an easy answer to the text that reads: “What does your teen want for graduation?” (Or for any holiday or special occasion.) Family and friends can directly contribute to the graduate’s higher education, which feels special and makes a difference. Most importantly, grads benefit when their 529 plan grows as they have more funds to access when paying for qualified college expenses, such as tuition and books.
529 plan overview
One of the biggest advantages to college savings plans (also called 529 plans) are the tax benefits. Funds grow tax-deferred and qualified 529 withdrawals are tax-free. That means more money in your pocket. With a 529 plan, you may also be able to take advantage of several other tax benefits at the federal and state level. The availability of tax or other state benefits (such as financial aid, scholarship funds and protection from creditors) may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors.
These plans are flexible and can be used at any accredited 2- or 4-year college, vocational or technical school, or graduate school anywhere in the United States, and even some international schools. Account holders decide on an investment path that best suits their needs and can make up to two changes per year. There are not any age or income limits. In short, it’s the smart way to save for college.
Lastly, consider this interesting insight: Families with a plan to save for college save 76 percent more than parents who are saving but don’t have a plan. That’s according to the most recent data from the “How America Saves for College” national study, and a big reason to check out 529 plans.
Congrats to all the 2018 graduates and their families!
Before investing, carefully consider the plan’s investment objectives, risks, charges and expenses. This information and more about the plan can be found in the Learning Quest Handbook, available by contacting your financial advisor or American Century Investment Services, Inc., Distributor, at 1-800-579-2203, and should be read carefully before investing. If you are not a Kansas taxpayer, consider before investing whether your or the beneficiary’s home state tax offers a 529 Plan that provides its taxpayers with state tax and other benefits not available through this plan.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
As with any investment, withdrawal value may be more or less than your original investment.
The earnings portion of non-qualified withdrawals is subject to federal and state income taxes and a 10% federal penalty.
Notice: Accounts established under Learning Quest and their earning are neither insured nor guaranteed by the state of Kansas, the Kansas State Treasurer or American Century.
Administered by Kansas State Treasurer Jake LaTurner
Managed by American Century Investment Management, Inc.
American Century Investment Services, Inc., Distributor
4500 Main Street, Kansas City, MO 64111
A good place to start