We’ve all given someone a gift card. It’s a popular gift, especially around the holidays. In fact, a recent poll found that 56% of those interviewed planned to give gift cards this holiday season. But there’s a new development in gift cards: you can now purchase a gift card for a 529 plan. A recent Investopedia article looks at the details.
Giving to a 529 plan is a popular way to save for a child’s college education. Any relative or even a friend can purchase a plan directly from either a state administrator or financial advisor. Funds are then invested and allowed to appreciate tax-free, so long as any withdrawn funds go exclusively toward college-related expenses.
Now, a few websites—and even retailers—are offering gift cards. One website, Giftofcollege.com, now offers plastic gift cards at participating Toys “R” Us and Babies “R” Us locations as of early last month. The idea is that those buying gifts for little ones can give the gift of a college education, as well.
Giftofcollege.com’s cards range in value from $25 to $500 and follow a simple process. There is an initial fee of between $3.95 and $5.95, depending on the value of the card. A recipient can go to the website to register the card and direct the funds into an existing 529 plan. There is no charge to the recipient to redeem the card.
If you’re doing holiday shopping online, you can also check out LEAF College Savings. Similarly to Giftofcollege.com, LEAF mails the gift card to the recipient after a small fee is paid ($2.95 and up, depending on the card value selected). You can select a denomination ranging from $25 to $1,000 and all the recipient needs to do is register the card and transfer the funds into an existing 529 account.
Of course, you can go the traditional route, as well. You can coordinate with the recipient ahead of time and send a check directly to the plan administrator. The funds will be placed in the recipient’s account, so long as you provide the account number.
For more information about 529 plans, take a look at our recent blog post or for more information about providing for your children, especially in your estate planning, explore our website and contact us to schedule your consultation today!
Reference: Investopedia (November 25, 2016) “Gift Cards for 529 Plans”