Three ways to give the gift of education

December is known as giving season. Why not give the gift of education to a child or grandchild with a 529 college savings plan? There are three ways to help maximize your giving and 529 plan — accelerated gifting, automatic contributions, and Ugift®

Accelerated gifting

Accelerated gifting or “superfunding” is a special provision of 529 plans that allows a person to make five years of contributions (the current year plus four future years) in a single year. It’s up to $80,000 per person (five times the $16,000 annual gifting limit per beneficiary for 2022) or $160,000 for married couples filing jointly .Footnote 1 (The annual gift amount rises to $17,000 in 2023, so a person can contribute $85,000 and a married couple $170,000.) A person can gift to as many people as they want in a year, so you can superfund a 529 college savings plan for as many children as you want.

Accelerated gifting can be useful for those who want to reduce their taxable estate. For estate planning purposes, the Internal Revenue Service considers assets held in a 529 plan as a completed gift and treats them as the beneficiary’s assets, not the account owners.¹
Accelerated gifting can be beneficial to a child too. A large one-time gift to a 529 plan can benefit from compounded growth, especially if it’s made when the child is born and has 18 years to grow. Consider this example. John used accelerated gifting to contribute the maximum allowable five-year gift of $80,000 to a 529 plan for his grandson. After 18 years and assuming a 5% annual rate of return, it could grow to more than $192,000. He also reduced his estate by $80,000. If his wife also makes an $80,000 one-time gift, the $160,000 could grow to more than $385,000. They reduce their estate by another $80,000 too.²

Make it automatic

If you want to contribute meaningfully to a child’s education but can’t make a large one-time gift, regular automatic contributions are another way to help maximize savings. A $200 monthly contribution, for example, can grow to more than $41,400 in 18 years.³

You get the benefit of compounding growth too. Automatic contributions also utilize dollar-cost averaging, so you purchase fewer shares when prices are high and more shares when prices are low. Plus, automatic contributions are a set-it-and-forget-it way to make regular contributions.

Learn more about automatic 529 plan contributions.

Anyone can make a gift contribution
If people are asking about gift ideas this holiday season, consider suggesting contributing to a 529 savings plan for a child. Friends, family members, employers, and anyone else who wants to can contribute to a CollegeBound 529 plan using Ugift®. For each beneficiary, 529 plan owners receive a unique Ugift® code. They can share this code with others who wish to contribute to the account at Ugift529.com. Ugift® has an easy solution for those who may be uncomfortable asking for a contribution. Polite requests can be made via Ugift’s email or with a Facebook or Twitter account.

Learn more about Ugift®.

Every contribution — large or small — counts
Every dollar saved today is a dollar plus interest a student or parent may not have to borrow tomorrow. Learn more about how to contribute to a child’s education with a 529 college savings plan.