Supersize Your 529
It’s time for a year-end check-in on your 529. One of the best aspects of 529s is the opportunities for free money. Here are a few ways to get more free money into your account:
Have other people contribute for you.
Are you stressing out about the junk your kids are going to get for the holidays? If so, give your generous friends and family an alternative: your 529's gifting page.
Gifting pages are links you can share that allow others to contribute directly to your 529. It's an easy way to build up college savings-- annual gifts of $100 would give your student an extra $3,500 for college by the time they finish high school. Gifts of $500 per year would give them over $15,000.
How do you do it? Log into your account and search for a gifting link. Almost every 529 plan offers this feature, but if yours doesn't, you could open an account in a different plan such as Utah's my529 to access its gifting feature. Then, just send the link out to people who are generous with your kids along with a note letting them know that you appreciate their generosity and wanted to make them aware that saving for college is a priority for your family. In many cases, individuals who gift to a 529 can access state tax benefits for their gifts, too; check your plan's rules so that you can communicate all the benefits.
And then make sure you send the link out again at your child's birthday, graduation and other gift-giving occasions! Note that gifts to 529s are subject to the IRS' annual gift tax exclusion amount, currently $18,000 per donor/recipient.*
Max out tax deductions or credits.
If your state offers a tax benefit for contributions, make sure you’re contributing enough to get the maximum benefit (after you’ve maxed out retirement savings, of course). Now is a great time to check whether contributions need to be in the account by Dec. 31 or by April 15 in order to get a current year tax deduction or credit; this varies by state so look up your state’s rules.
If your student is already in college, you can continue contributing to your 529 to get the tax benefits of contributions. If you’re getting towards the end of your student’s college years, just make sure you don’t overfund the account (unless there are younger siblings who might need the money), and check the rules for claiming a tax benefit for contributions while you’re also spending money. It’s typical that plans require that you have the amount for which you’re taking the deduction in the account on Dec. 31. For example, if you’re taking a deduction for a $6,000 contribution, the plan will likely require that your account balance on Dec. 31 be at least $6,000.
Explore more creative options.
529s have other options to get more money in:
UPromise has a credit card that gives cash back to a 529
Many states allow you to link bottle deposit refunds to a 529
Many states allow your state tax refund to be deposited directly into your 529
Look up your plan's contribution info to see different ways you can build up your savings. Small amounts over time can result in your child having many more choices when the college years arrive.
* In English, this means that a person can give another person a cash gift of up to $18,000 (in 2024) without filing a gift tax return. Gifts in excess of that amount require givers to file IRS Form 709. Gifts to a 529 in excess of the annual exclusion amount are called "superfunding" and subject to specific rules; read more about that here.
Does thinking about college have you tearing your hair out? Check out my book, How to Pay for College, to develop a plan for your family, whatever your child's age or stage on the journey to higher education.
