How to Use Your 529's Gifting Page
'Tis the season, and with all the holiday trimmings comes the often-fraught topic of gifts. If you mean it when you say, "Please, no more toys!" then you will want to make sure your 529's gifting page is set up. One of the best ways to increase your college savings is to make it easier for others to help you save. Your 529 account's gifting page is a great tool for this.
Gifting pages allow others to contribute directly to your child's 529. Almost every 529 college savings plan offers a gifting page, and converting toys to college savings contributions can add up in a big way over time. Most plans allow parents to generate a link that can be shared with friends and family so that people who want to help with college can-- and you might be surprised at how many people are willing to pitch in!
Some things to consider when sharing your gifting page:
Does the giver or the account owner get the tax benefit for their donation? This varies from state to state, but one constant is that the giver needs to be a resident of the state in order to claim the tax benefit. Some states allow the account owner to claim the tax benefit for out-of-state contributions, or give all tax benefits to the account owner.
What's the contribution deadline for a current-year tax benefit? Most plans require contributions to be made by the end of the year; some even require contributions not just by the end of the year but by Dec. 29 or 30 to ensure that they are processed before the end of the year.
If the giver wants to give ongoing gifts to the student's 529, are they better off setting up their own 529 or gifting into the parent-owned 529? For a student with high need, it might be more beneficial for the giver to set up their own account so that it's not reported on the student's FAFSA. Likewise, for someone who intends to give generously and lives in a different state, the tax benefits of setting up their own account might be compelling. This is a great conversation topic, and one that might be prompted by sharing a gift link.
What is the plan's contribution limit for gifts? Many limit individual contributions to the annual federal gift tax exclusion amount, currently $16,000 per giver, per recipient, or less. If that's the case, and the person wants to give more, multiple gifts might be required. (And keep in mind that anyone contributing more than the federal gift exemption amount will need to file IRS Form 709 and elect 5-year treatment for the gift.) Again, if someone wants to contribute this much to your child's education, it's worth a conversation about the best way to do it.
So, hop on over to your 529 account and get that gifting page set up and shared!
