Give a Gift That Keeps On Giving

This is the perfect time of year to give a gift that will ease some of the stress associated with the holiday season for parents. Consider giving a gift certificate that would equal a contribution to a 529 college savings plan, or donate funds to a child’s investment or other savings vehicle. It not only alleviates some of the burden for the parent or guardian but also provides a foundation for the child’s educational future.
Many 529 programs offer gift certificates as ways for others to assist with the process of saving for someone else's children. These savings programs have become more attractive over the years because of the various tax benefits and savings available to the owners of these investments. The tax advantages include tax free growth on the earnings and federally tax free withdrawals used for qualified education expenses. There may also be a state income tax deduction available for you depending on the state in which you reside. To qualify for the state tax deduction all contributions for that tax year must typically be received by December 31st. One website that offers a great source of information on college savings programs is http://www.savingforcollege.com.
Minimum contribution amounts can be as low as $25. If you do not want to purchase gift certificates many 529 plan providers allow for third party contributions; You simply write the check payable to the plan. Although just about anyone may be able to make contributions, only the account owner can take the state income tax deduction; Check with the plan to be certain. Keep in mind that the funds that you invest in the 529 program are not guaranteed.
There are other savings programs available besides the 529 college savings plans. You can give the parent a check payable to the child. Parents can then open an account with their local bank or credit union in their child's name. This is a great way to teach children the value of money and the drive home the importance of saving early on and watching deposits accumulate over time.
Remember that there is no time like the present. You don't need thousands of dollars to build a nest egg for your little ones; It is also never too late to build one. Even if your children, nephews, or nieces are in high school keep in mind that they may be heading off to college or getting married and having their own children one day. A stash for their future endeavors can be a valuable resource when they really need it.