Themacforums – Feb 14, 2023 – Giving the Gift of Education with the NC 529 Plan. The phrase “It Takes a Village” is not merely an adage. When spending money on a child’s education, this is especially true.
Even though most parents begin making plans for their children’s future at a young age, it can be difficult to accumulate enough savings to pay for all of their educational expenses. Parents can easily rely on their community to support their child’s educational objectives thanks to the NC 529 Plan.
Easily Contribute from friends and family
Does it make you uncomfortable to ask your loved ones for financial support for your child’s education? Not at all! In fact, a recent poll revealed that over half of the parents intended to request a gift for their child’s school savings plan from grandparents, other family members, and friends in conjunction with a birthday or holiday. It’s just logical.
Although toys and clothes make lovely presents, education is something kids will always need. Contributing to a child’s K–12 or college education is now simpler than ever thanks to new gifting options.
Education Crowdfunding
Entrepreneurs invented crowdfunding, but it has now become a well-liked method of funding nearly everything, even a child’s education. Small contributions from friends and family can pile up over time.
With the help of a crowdfunding platform, the NC 529 Plan is pleased to introduce a new gifting innovation that enables anybody to make a gift to a loved one’s NC 529 Account.
The NC 529 Participants can use new gifting linkages to enable grandparents, aunts and uncles, extended family, and friends to become “backers” for a child’s education thanks to the integration with Backer, a best-in-class fintech business. Friends and family may easily contribute one-time presents for birthdays and holidays or set up recurring donations to a child’s account thanks to gifting sites powered by backers.
According to Laura Morgan, Vice President of Communications, Savings, and Legal Affairs at College Foundation, Inc., “the new gifting links make it so much simpler for friends and family to give to an NC 529 Account” (CFI).
“Participants in NC 529 programs only need to go into their accounts, select “Take me to Gift,” and wait for a link to be sent to their friends and family by email or text. Then, close family and friends can make a donation using Apple Pay, Google Pay, bank draught, or credit card. This additional functionality will assist families in saving money for K–12 and college costs, and we couldn’t be more thrilled about it.”
Tax advantages and flexibility
The NC 529 Plan offers tax benefits in addition to making it easier to save for school. When used to cover eligible educational costs, the profits that accumulate in an NC 529 Account are tax-free.
The money you withdraw to pay for a student’s college room and board, tuition, trade school costs, student loan payments, K-12 costs, and other expenses won’t be subject to taxes as a result.
The NC 529 Plan is a great tool for parents to save for their children’s education because of the tax benefits, according to Morgan. “Additionally, starting in 2024, unused 529 contributions can be rolled over into a Roth IRA thanks to the amendments made by the SECURE 2.0 Act, giving families who are worried about retirement and education planning peace of mind. The new regulations offer a lot more latitude.”
Limits on Generous Gifting
Grandparents are significant NC 529 Account donors, and they frequently question how much they may contribute to each of their grandchildren. Although there are no restrictions on the amount that can be given as a gift, some families might worry about gift taxes. Before gift tax limits kick in in 2023, grandparents and other family members may give each beneficiary an annual gift of up to $17,000, and married couples may give each beneficiary an annual gift of $34,000.
As a result, a grandmother who has four grandchildren can present up to $68,000 ($17,000 per child) without exceeding the gift tax threshold. It’s crucial to keep in mind that gift taxes apply to more than simply contributions to 529 plans. Gifts that aren’t made in a 529 plan, such as gifts of property or cash, are likewise covered by the yearly gift tax exclusion.
Although $17,000 a year is a significant sum of money and can help a child’s education savings account grow quickly, most families are probably only able to allocate lesser amounts, and every little bit helps! Contributions to the NC 529 Plan begin at just $25, making it the ideal present for any price range. Furthermore, there are no restrictions on when to submit gifts.
It really is a one-size-fits-all proposition to contribute to a child’s education, according to Morgan. We constantly advise families to start saving for a child’s education as soon as possible to have a lasting impact on them.
College is only a few years away!
Children mature so quickly. You may feel as though the years are passing so quickly and that you need to cherish every second. Your little children won’t be that young for long, and they’ll require a good education to launch their futures. So that kids can develop into the brilliant minds of the future, don’t be hesitant to ask friends and relatives to contribute to their education.
A child’s future is something that can never be replaced, according to Morgan. “It is a pleasure for the NC 529 Plan to support families on that journey.”
