Wealth Insights is our regular financial planning update, generally refreshed on Thursdays. Wealth Insights provides perspective on financial planning topics to help as you consider options for navigating your financial life.
529 plans can be a great way to save for college, but they’re not the only way. When you’re investing for a major goal like education, it makes sense to be familiar with all of your options.
Direct payment of tuition to an educational institution is not considered a taxable gift. Therefore, you’re able to “give away” more than $19,000 per year (the annual federal gift tax exclusion) for your grandchild’s college education and not worry about gift taxes. However, colleges may reduce a student’s institutional financial aid by the amount of your payment. So before sending a check, ask the college how it will affect your grandchild’s eligibility for college-based aid.
Looking for a tax-advantaged college savings vehicle that has no age restrictions and no income phaseout limits — and one you can use to pay for more than just tuition? Consider 529 savings plans, a popular way to save for higher-education expenses.