Don’t Wait For Special Occasions To Add to A 529 Plan
People want to give gifts that make a positive impact throughout their loved ones’ lives. These gifts usually coincide with major holidays or special events like birthday, graduations, Easter, Christmas, and baby showers.
But most special occasions only come once a year or less.
For people who have a Leap Year birthday on February 29, this only occurs only every four years! (And best wishes to your “leap-year baby” if they’re celebrating their first, second, third or fourth birthday this weekend!)
These can add up to many missed opportunities to save.
Not just for special events
Be on the lookout for everyday moments to add for your children’s 529 higher education account. If there’s a little extra remaining in your checking account after paying all the bills for the month, roll it over to your 529 plan. Did you receive a bonus at the holidays or received a raise at work? Consider taking the increase and directly depositing it into the college savings account. Are you getting a large income tax refund this year? Why not use part or all of it to fund the 529?
Disappearing expenses are those costs in your budget for a limited time. For instance, preschool is a large disappearing expense for families. Once your child starts kindergarten, consider rolling over your former preschool or day care costs into regular contributions to your 529 account. You won’t miss it and you are continuing to support your child’s educational needs
Other disappearing expenses can include paying off a car loan, medical or dental bills, credit card debt, or even your own student loans. Once you have a zero balance on those obligations, you can roll those budgeted dollars into your child’s 529 plan instead. Again, these items have been part of your budget so you aren’t losing any additional income by transferring those dollars to a 529 account. As you know from paying off those bills, it’s far cheaper to save now than pay off loans later.
Anyone can contribute to a 529
Ohio’s 529 Plan offers a simple way for others to make contributions to a CollegeAdvantage Direct 529 Plan - Ugift.
Ugift makes it easy for you, as the account owner, to set up a code that will authorize others to donate directly to your 529 plan online without needing the actual account number. You just need to log in into your CollegeAdvantage Direct 529 Plan, then hit the Ugift button on the right-hand side of the screen. The next screen shows all the accounts you have as the account owner and the Ugift codes are automatically generated. You can opt to share the code via Facebook and Twitter, or email the code to your loved ones who wants to give to the 529 plan individually.
Once the gift giver has the code, they can visit the Ugift home page and type in the code. The next screen will verify your child’s name and your name as the account owner to make sure they are contributing to the correct plan. Then the gift giver can add their banking account information to set up the contribution. In fact, they can save their user profile to continue making recurring electronic gifts for college as the Ugift code will still be good.
If a gift giver is an Ohio taxpayer, they too can deduct up to $4,000 in contributions per beneficiary, per year, from their state taxable income, per contributor (married couple). Your loved one who lives in Ohio does not have to be the account owner to deduct their contributions from their State of Ohio taxable income. In order to take advantage of the state income tax deduction, the contribution must be made payable directly to your 529 account, not to your child.
Have gift givers who may prefer to contribute by check? Have them to write a check payable to the Ohio Tuition Trust Authority, rather than the beneficiary, and give them your 11-digit account Ohio 529 account number to add to the memo line along with the beneficiary’s full name. The contributor can then mail it to our address: CollegeAdvantage Direct 529 Savings Plan, PO Box 219305, Kansas City, MO 64121-9305. Again, if the gift giver is a taxpayer in Ohio, they can deduct their own gift contributions from their state taxable income.
So remember, while February 29 only comes once every four years, you shouldn’t wait for special occasions to add to a 529 plan. Ohio’s 529 college savings plan is a simple way to save for any higher education goal and it’s accepted nationwide. There is no fee to open an Ohio 529 Plan; the minimum contribution is $25. Someday your child is going to college. Someday starts at CollegeAdvantage.com.
Posted on February 27, 2020