How to give the gift of college savings

Kathryn FlynnBy Kathryn FlynnBy Savingforcollege.com

A gift of college savings is a meaningful alternative to traditional birthday, holiday, baby shower and graduation gifts. A recent survey from the College Savings Foundation found that 61% of parents would ask to receive a gift of college savings instead of a material gift. Many 529 plan gifting platforms allow friends and family to make a secure electronic deposit to a child’s 529 plan account.

Benefits of Gift Giving through a 529 Plan

A 529 plan gift will grow tax-free over time, and distributions will not be taxed as long as the funds are used to pay for qualified higher education expenses. If the beneficiary decides to use the funds for something other than college, only the earnings portion of the distribution will incur income tax and a 10% penalty.

Gift givers may also qualify for a state income tax deduction or credit for 529 plan contributions. Most states allow anyone who contributes to a 529 plan to claim the income tax deduction or credit, while some only offer this benefit to the 529 plan account owner.

How to Give a Gift through a 529 Plan

A gift giver can open a new 529 plan account in a child’s name or contribute to an existing account. Contributions to a custodial 529 plan account or to a parent-owned 529 plan will minimize the impact on eligibility for need-based financial aid.

Gift contributions can be sent by check to almost any 529 plan. Just make the check payable to the 529 plan and write the beneficiary’s name and account number on the check. But, the 529 plans listed below make it easier to give the gift of college with online contribution and other crowdfunding tools. You can also contribute to a 529 plan with Gift of College gift cards, which are available to purchase online or at over 3,000 retailers including Target and Barnes & Noble. Ask the child’s parent about the best way to contribute.

How to Avoid Gift Taxes on 529 Plan Gifts

Most people can make fairly large contributions to a child’s 529 plan without incurring gift taxes. Gifts of up to $15,000 per beneficiary will qualify for the annual gift tax exclusion. Friends and family who want to make a larger tax-free gift can use 5-year gift tax averaging. Gifts between $15,000 and $75,000 can be treated as if they were spread evenly over a 5-year period. The gift tax exclusion limit is per gift giver, so a couple could give $30,000 per year without incurring gift taxes.

529 Plans that Offer e-Gifting Platforms

529 Savings Plan

Gifting Program

e-Gifting

Gift Cards or Certificates

Customizable Invitations

Gifting Portal

CollegeCounts 529 Fund Direct- and Advisor-Sold (Alabama)

GiftEd

Yes

Yes

T. Rowe Price College Savings Plan (Alaska)

GoTuition

Yes

Yes

Yes

Yes

University of Alaska College Savings Plan

GoTuition

Yes

Yes

Yes

Yes

Fidelity Arizona College Savings Plan

Fidelity College Gifting Program

Yes

Yes

Arizona Family College Savings Program – Bank Plan

College Savings Bank, a Division of NexBank, Gifting Program

Yes

Yes

Arkansas 529 Plans, Direct- and Advisor-Sold

Ugift

Yes

Yes

Yes

Scholarshare 529 (California)

Yes

Yes

Yes

Direct Portfolio College Savings Plan (Colorado)

Ugift

Yes

Yes

Yes

Connecticut Higher Education Trust (CHET)

Yes

Yes

Yes

DC College Savings Plan

Ugift

Yes

Yes

Yes

Delaware College Investment Plan

Fidelity College Gifting Program

Yes

Yes

Florida 529 Savings Plan

Yes

Yes

Yes

Path2College 529 (Georgia)

Yes

Yes

Yes

Hawaii’s College Savings Program

Ugift

Yes

Yes

Yes

Idaho College Savings IDeal

Ugift

Yes

Yes

Yes

Illinois College Savings Plans, Direct- and Advisor Sold

GiftEd

Yes

Yes

CollegeChoice CD (Indiana)

College Savings Bank, a Division of NexBank, Gifting Program

Yes

Yes

CollegeChoice 529 (Indiana)

Ugift

Yes

Yes

Yes

CollegeChoice Advisor 529 (Indiana)

Ugift

Yes

Yes

Yes

College Savings Iowa

Ugift

Yes

Yes

Yes

Kentucky Education Savings Plan

Yes

Yes

Yes

LearningQuest 529 Education Savings Program Direct- and Advisor Sold (Kansas)

Ugift

Yes

Yes

Yes

Maryland 529

GoTuition

Yes

Yes

Yes

Yes

Michigan College Savings Plans, Direct- and Advisor-Sold

Yes

Yes

Yes

Minnesota College Savings Plan

Yes

Yes

Yes

MOST- Missouri’s 529 Savings Plan

Ugift

Yes

Yes

Yes

Achieve Montana

Ugift

Yes

Yes

Yes

NEST 529 College Savings Direct- and Advisor-Sold (Nebraska)

Ugift

Yes

Yes

Yes

SSgA Upromise (Nevada)

Ugift

Yes

Yes

Yes

The Vanguard 529 Plan (Nevada)

Ugift

Yes

Yes

Yes

USAA 529 College Savings Plan (Nevada)

Ugift

Yes

Yes

Yes

UNIQUE College Investing Plan (New Hampshire)

Fidelity College Gifting Program

Yes

Yes

New Jersey 529 College Savings Plans, Direct- and Advisor-Sold

Franklin Templeton Spryng

Yes

Yes

Yes

Yes

New York’s 529 College Savings Program, Direct- and Advisor-Sold

Ugift

Yes

Yes

Yes

College SAVE Direct- and Advisor Sold (North Dakota)

Ugift

Yes

Yes

Yes

Ohio CollegeAdvantage 529

Ugift

Yes

Yes

Yes

Oklahoma 529 College Savings Plan

Yes

Yes

Yes

Oregon College Savings Plan

Yes

Yes

Yes

PA 529 (Pennsylvania)

Ugift

Yes

Yes

Yes

CollegeBound Saver (Rhode Island)

Ugift

Yes

Yes

Yes

CollegeBound 529 Advisor-Sold (Rhode Island)

Ugift

Yes

Yes

Yes

FutureScholar 529 Advisor and Direct (South Carolina)

Yes

Yes

Yes

TNStars 529 College Savings Program

Yes

Yes

my529 (Utah)

my529 Gift Program

Yes

Yes

Virginia529

Virginia529’s Gift Center

Yes

Yes

Vermont Higher Education Investment Plan

Yes

Yes

Yes

DreamAhead College Investment Plan

Yes

Yes

Smart529 Select and Direct (West Virginia)

Ugift

Yes

Yes

Yes

Edvest (Wisconsin)

Yes

Yes

Yes

Find your 529 plan - Select your state below

Did you know that residents are not limited to investing in their own state's plan? Another state may offer a plan that performs better and has lower fees. Select your state below to see your state's plan and other options.

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Find a 529 Plan. Select your state below.

Did you know that residents are not limited to investing in their own state’s plan? Another state may offer a plan that performs better and has lower fees. Select your state below to see your state’s plan and other options.


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