Finally, a birthday gift that's fiscally responsible. Instead of giving children more toys, DVDs or video games, family members and friends can easily contribute toward a child's college kitty.
State-sponsored 529 plans are the best way to save for college. Not only does your money grow tax-deferred, but distributions escape taxes altogether if they're used for qualified educational expenses. About two-thirds of states offer plans that also deliver a state income-tax deduction or other tax benefits for contributions.
| Row 0 - Cell 0 | Pay for College Without Breaking the Bank |
| Row 1 - Cell 0 | Find the Best 529 Plan for You |
| Row 2 - Cell 0 | The Best Ways to Pay for College |
Until now, however, contributing to a 529 plan has been inconvenient if you are not the account owner. Donors usually have to fill out long forms and mail in the paperwork with their contributions. But that's changing. Upromise, a 529-plan administrator, has streamlined the process through its Ugift program.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Its Web site www.upromise.com lets account owners invite relatives and friends to contribute free of charge to a 529 plan for birthdays, holidays and other events.
You can fill out the forms online and print a coupon that you mail with your check. So far, the Ugift option is available in five 529 plans sponsored by four states: Arkansas, Idaho, Missouri and Nevada. Upromise intends to roll out the program to all 11 of the plans it runs.
Response to Ugift invitations has been impressive. Since the site launched last November, more than 5,550 posted events had raked in $730,800 as of July 1. The average gift is $50, but you can give as little as $15. One generous contributor cut a $50,000 check for a 529-plan beneficiary.
Similar sites are starting to appear. FreshmanFund.com, a start-up, lets parents and other account owners ask donors to contribute online to any 529 plan, not just those run by a particular administrator. There's no fee, but the company eventually wants to sell 529 plans and other products to users. If the college-contribution-as-gift trend takes off, birthday parties may never be the same.
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
How Intrafamily Loans Can Bridge the Education Funding GapTo avoid triggering federal gift taxes, a family member can lend a student money for education at IRS-set interest rates. Here's what to keep in mind.
-
How an Irrevocable Trust Could Pay for EducationAn education trust can be set up for one person or multiple people, and the trust maker decides how the money should be used and at what age.
-
UTMA: A Flexible Alternative for Education Expenses and MoreThis custodial account can be used to pay for anything once the beneficiary is considered an adult in their state. There are some considerations, though.
-
Coverdell Education Savings Accounts: A Deep DiveWhile there are some limitations on income and contributions, as well as other restrictions, a Coverdell can be a bit more flexible than a 529 plan.
-
529 Plans: A Powerful Way to Tackle Rising Education CostsContributions to 529 plans grow tax-free and are not taxed when they are used to pay for qualified educational expenses for the beneficiary.
-
Roth IRA Contribution Limits for 2025Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
Four Tips for Renting Out Your Home on Airbnbreal estate Here's what you should know before listing your home on Airbnb.
-
Five Ways to a Cheap Last-Minute VacationTravel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
