Whenever you feel like your child has achieved a milestone, it’s likely that you’ll want to celebrate with friends and family. It’s very common that, while a child is still young, relatives and family members give gifts like toys and playthings that may seem useful at the time aren’t very beneficial in the long-term at all.
Instead of stocking up on gifts for your child that you know he/she doesn’t need later on, why not ask relatives to give a more useful gift? A gift like education. Since the cost of a college education is so high, it’s impossible for a family to cover it up all at once. You can ask relatives to make small contributions that can be of help when the time arises.
Even friends and family want to give a gift that would be impactful for your child’s future, so asking them to contribute to your 529 plan instead of giving presents on holidays, birthdays, and other life events is a sure-fire way to safeguard your child’s future education. There are, however, a few guidelines that have to be remembered if you’re planning on starting your child’s 529 plan through an organization like The Gift of Education.
Limits On Contributions
There are limits as to how much can be contributed, to an account, at a time. To be specific, there are state limits that apply whether the plan in question is a college savings plan or a prepaid tuition plan. In most states that have a college savings plan, a limit is put on the total value of a 529 plan account. This means that once the account has reached its limit, whether it was through earnings or contributions, it will stop accepting contributions.
On the other hand, states that offer prepaid tuition plans (with or without guarantees) place a restriction on the total amount of contributions. So if the state limit is, say, $250,000, a relative or friend can’t contribute more than that.
The restrictions on contributions are placed on a per beneficiary basis. This means that no matter how many relatives set up an account for your child, there will be a limit as to how much all the accounts can generate. Just as there’s a limit as to how much can be deposited into an account plan(s) for a single beneficiary, there’s also a minimum amount that must be deposited.
It may be required that you deposit a specific amount of money into your account after opening it, make sure that each contribution made is of a certain amount, and calculate that a year’s entire savings be a certain amount.
Luckily, there aren’t as many restrictions on the number of people who can contribute to a certain 529 Plan account. You can ask your siblings, parents, and friends to help you raise money for your child’s future education by adding money to the account. Also, make sure to remind friends and family that gifts are only accepted in cash. This includes bank orders, checks, and payments through credit cards. If your relatives intend to use a form of money such as bonds and stocks and if they want to contribute through such as a source, it’s crucial that they liquidate their assets first.
So why wait until tomorrow to begin saving money for your child’s education? It’s never too late or early to begin saving using The Gift of Education’s crowdfunding programs.