Who Can Contribute To A 529 Plan?
529 plans are tax-advantaged savings accounts for whatever higher education comes after high school for your child – whether it’s a two-year, four-year, trade, vocational, or graduate school. 529 plans can also be used nationwide so even if you choose to save in Ohio’s 529 Plan, CollegeAdvantage, your child can use that money for their high education at any accredited post-secondary educational institution across the U.S.
As the parent, you usually set up a 529 account for your child, who will be the beneficiary. However, you are not the only person who can contribute to your child’s 529. Your family and friends can contribute to your child’s higher education with gifts to the 529 college savings account. Anyone you trust with your child’s 529 account number can make a contribution to it.
Anyone Can Contribute To A 529 Plan
Your loved ones want to give meaningful gifts for the major milestones in your child’s life. By asking them to consider gifts of higher education in lieu of other gifts at baby showers, birthdays, holidays, graduations, and many other special occasions, your child’s future will continue to benefit.
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 which 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, Twitter, or email immediately or you can contact your loved ones who wants to give to the 529 plan individually.
Once the gift giver has the code, they can visit Ugift529.com 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 making a contribution 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.
Anyone Can Open A 529 plan
In fact, loved ones can also open their own 529 plan for your child. Research has shown that a large number of 529 plan gift givers are grandparents who place a tremendous value on higher education. Your child can be the beneficiary of more than one 529 account, including ones where you are not the account owner. If your child’s grandparents wants to open a 529 account, they will be the account owner and will oversee the account. They will determine when to make withdrawals to pay for your child’s higher education expenses. They also control transfers between accounts, which is especially flexible to transfer surplus funds from one grandchild’s 529 to another. Or they can opt to transfer their 529 account funds into your already established 529 as time draws near for your child’s higher education.
Again, grandparents who are Ohio taxpayers can take the deduction from their state income tax for contributions made to a CollegeAdvantage 529 account of up to $4,000 in contributions per beneficiary, per year. Make sure that grandparents are aware that there are gift tax considerations that may come into play depending on the amount of the gift contributions. The current annual gift tax exclusion is up to $15,000 per person to each beneficiary, per year, but that amount is inclusive of all gifts to a beneficiary, not just gifts to a 529 account. Additionally, your child’s grandparents can use 529 plans as part of their estate-planning strategy. As this is a complicated area of tax law and strategies vary from person to person, please have them consult with a tax or financial advisor for information on this option.
Ohio’s 529 Plan is the tax-free way to help pay for college nationwide. So when next celebration comes around and your family and friends asks for gift ideas, encourage them to give the gift of a higher education with a contribution to your child’s Ohio Direct 529 Plan! For someday your child is going to college. Someday starts with Ohio’s 529 Plan, CollegeAdvantage.com.
Posted on June 14, 2019