Not sure what to get your child, grandchild, or another relative for Christmas? Consider a 529 plan! In this article, we’ll cover exactly what you need to know about 529 plans and why they make a perfect holiday present.
What is a 529 Plan?
529 plans are financial investment accounts that help you plan for a child’s future education. They can be used to pay for college, tuition, and college-related expenses, but you can also use them for other costs including K-12 tuition and apprenticeship.
What are the Benefits of a 529 Plan?
There are quite a few benefits to opting for a 529 plan for someone in your life. They include:
- There are no income restrictions.
- They have little impact on financial eligibility for loans and grants in most cases.
- Anyone can open it for a beneficiary, even themselves.
- The beneficiary can be of any age.
- Every state has their own 529 plan, and you don’t have to go with your home state.
- You can actually find the best state option for your financial situation.
- Can contribute up to $75,000 to the beneficiary each year.
- Beneficiaries can be changed.
- If the child it was intended for decides not to go to college, it can be used for another.
- There may be available estate tax benefits.
- Money can be taken out at any time for any need.
- If it’s not for education purposes, though, it is subject to a 10% federal penalty tax and any state or local taxes.
Why Is a 529 Plan an Amazing Gift?
Whether you opt to give a 529 plan for a loved one for Christmas, another holiday, a birthday, or just in general, it makes an amazing gift.
Others Can Gift into the Account
One reason that it’s a great gift: anyone can contribute to the plan. You can set it up and start putting money into it, and then you can ask loved ones and friends to gift money into the account if they’re interested!
It Reduces Stress and Worry
College and education expenses are no joke. By giving a 529 plan to a loved one or even a family friend, you can reduce the stress and worry that comes with planning college finances. It can make college more affordable, and even help the future student attend a college they hadn’t previously considered due to the sheer cost of tuition.
The benefits of a 529 plan can’t be understated. It can be for anyone in the family or even your friends. And it will absolutely take a weight off their shoulders when it comes to affording college.
Check out RaptorFi’s College Financing Plan to help you choose the best routes for your student and their financial needs. Use our planning tool to get your ducks in a row when it comes to saving and funding.
