Friends and family can use college 529 gift registries and other online tools with minimum contribution amounts as low as $25.
How to give the gift of college this holiday season.
If you are like me and already thinking about your holiday shopping list, consider this for an idea: a contribution to a 529 college savings plan.
A 529 gift can pay off big for college students, whether they are attending school this year or a decade from now. And thanks to new tools, it’s becoming easier to make such gifts.
“In the early days, you always needed the account number in order to make a gift,” said Mary Morris, chair of the College Savings Foundation, a nonprofit that works to build public awareness about 529 plans, and chief executive of the Virginia529 College Savings Plan.
But now it can be done electronically, “no account number required,” she said.
Worried that your loved ones will be upset about not giving the usual sweater or trendy toy? Don’t be.
A 2014 study by Fidelity Investments found that 90 percent of grandparents said they would likely contribute to a grandchild’s college savings fund in lieu of other gifts if asked.
“With people funding all sorts of things through crowdsourcing, asking friends and family to contribute to a 529 plan has become more acceptable,” Morris said.
So how do you make it easy for loved ones to contribute? Read on.
Create a website. In the past, you generally had two options. You could ask for a check and deposit the money into a 529 plan yourself, or send your account information to friends and family. The first required gift givers to trust that the money would be put toward college savings, and the second required you to share personal information.
As a solution, some 529 sponsors have been rolling out gift registries and other online tools with minimum contribution amounts as low as $25.
Starting last year, Fidelity Investments, for example, introduced the option for 529 account holders to create a personal Web page through which gifts are made electronically.
The website is customizable. You can include a picture of the child and details, like what she wants to study in school.
A link to the site can then be shared by email, party e-vites, or Facebook and other social media. When gifts are made, funds are taken electronically from the giver’s bank account and deposited into the 529 plan.
There are no fees, and contributions have been substantial, averaging just over $450, according to Keith Bernhardt, vice president of college planning at Fidelity.
“We saw a spike in the number of people making gifts during the last holiday season, and we expect the same to happen again this year,” Bernhardt said.
If you don’t have a Fidelity account, you can create a website through third-party provider GiftedPath. The company works with select 529 plans to deposit funds directly into accounts. If you don’t have a participating plan, the site will send contributions electronically to you.
It’s free to sign up and create a website, but gift givers are charged a small fee when making a contribution.
Send a gift code. Other 529 plans may require you to provide friends and family with a gift code so that the money is deposited into the correct account.
In other cases, gift givers may still have to print out a coupon and mail a check to the 529 plan sponsor. An account number is not always necessary, but they will need to know the beneficiary’s name and date of birth.
Sharing at least that information may be worth it, though.
“If you can get friends and family to put money in, even small amounts over time will make a big difference,” Morris said.