Parents: Ask Santa for a College Savings Contribution
If your children are anything like mine, they already have way too much “stuff” and are likely to get much more in the coming month. My wife has already started hiding boxes in our unfinished basement, and it certainly appears as though Santa will get a lot of credit yet again!
While I certainly don’t advocate a “no gift” policy, I would suggest putting some of your hard-earned dollars to work for your child or grandchild in the form of a 529 College Savings Plan. For a number of reasons, this is an especially good idea for younger children who really just need something to open vs. the more expensive gifts that tend to come as kids get older.
Parents, if you already have established 529 College Savings accounts for your children, then good for you! Encourage relatives to contribute to these accounts in lieu of a few gifts that your children probably don’t need anyway. Anyone can contribute to these accounts as long as they know how to make the check payable and where to send it. Most companies also ask that the account number go in the memo line, and some will go so far as to provide gift receipts that can be presented to the recipient.
Parents and all other relatives who have yet to establish an account, any of you can and should do so. You typically only need to know the child’s date of birth and social security number to set up an account. And, it is perfectly fine for one child to have multiple college savings accounts. While there is no federal tax deduction for contributions, there is a state tax deduction that can be taken for most people. Most importantly, all of the money grows tax free and is not taxed at withdrawal if it’s used for college and college-related expenses.
For residents of Virginia, here’s a great website that outlines your options: http://www.virginia529.com/. And before you ask, your child does not have to go to an in-state school to enjoy the benefits of most plan choices.
Finally, if your child, grandchild, niece, or nephew absolutely has to have one more thing to open, buy a sweatshirt or other item emblazoned with your alma mater and enclose your contribution receipt along with it. It will give him or her a subtle nudge to your school even though he or she will likely pick the most expensive out-of-state institution no matter what!