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How to ask for gifts to a 529 account

Your friends and family are going to give gifts—why not give the gift of education?

Key takeaways

  • Gifts to your child's 529 account can help you hit your savings goals faster.
  • People sometimes feel awkward asking for contributions to a 529 account—but there are many good reasons to embrace education savings as gifts.
  • Teaching children about the value of education and saving for the future can help them appreciate gifts to their college fund too.
  

As if there isn't enough for parents to worry, paying for a child's education continues to get more expensive. For the 2023-24 school year, the average published (sticker) tuition and fee price is 1.51 times as high as it was 30 years ago at public two-year colleges, 2.09 times as high as it was 30 years ago at public four-year institutions, and 1.78 times as high as it was 30 years ago at private nonprofit four-year institutions (after adjusting for inflation).1

Given the steep price and the well-documented financial impact of student loans, it may be worth asking your friends and family to contribute to your child’s education with a gift to their 529 college savings account. It's likely that the people who know and love your family give gifts at birthdays and holidays. Instead of toys and games, why not ask for a contribution to a 529 savings account? It's a gift that can have a lasting and meaningful impact.

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Small amounts can add up

The great thing is that gifts to your 529 don’t have to cost a lot of money. There’s no minimum and every dollar helps. If 5 friends give $20 each for the first 10 birthdays of your child's life, that adds up to $100 a year. It's $1,000 over the course of a decade—plus any potential compounding investment returns that come with it.

If your 529 account is with Fidelity, you can create and share a link to your child’s personalized gift page with family and friends. From there, they can easily gift money online using an electronic check if they want to contribute. You can edit your gift page and track the gifts you've received from your private dashboard.

As the account owner, only you can access your dashboard, so your account information is kept private.

Consider this hypothetical illustration showing the power of gifting over time.

Gifts can supercharge your college savings

With regular monthly gifts of about $42 along with monthly contributions of $167 from the account owner, the balance after 18 years of saving and interest is approximately $20,463.85 more than account owner contributions alone.
Estimated numbers in chart above have been rounded to the nearest dollar. This hypothetical example assumes the following: (1) monthly contributions to a 529 account from the account owner of $166.66 only, made on the first of each month beginning when the child is born and continuing through age 18. (2) monthly contributions from the account owner of $166.66, and monthly gifted amount of $41.66 to a 529 account made on the first of each month beginning when the child is born and continuing through age 18, (3) annual rate of return of 7.5%, compounded monthly, and (4) no taxes on any potential earnings within the 529 College Savings Plan account.

Local and state taxes, inflation, fees, and/or expenses were not taken into account. If they had been deducted, performance would have been lower. The hypothetical is not intended to predict or project the investment performance of any security.

Past performance is no guarantee of future results. Your performance will vary and you may have a gain or a loss when you sell your units.

Tips for asking for gifts

Research has found that people may feel uncomfortable about asking for a gift to their child's 529 savings account. But it can be worth getting over that initial discomfort and speaking up.

Giving gifts to children is one of life's great joys—it usually makes the gift-receiver very happy and that makes the gifter happy. But children may not immediately appreciate the long-term gift of education in place of the next amazing toy or game. So it can be important to make sure that your child understands how important their education is and the value of saving for the future.

Read Viewpoints on Fidelity.com: Tips for raising a saver

To get your friends and family, and your children, to understand the significance of gifts to a 529, consider these 7 tried-and-true strategies straight from Fidelity customers.2

  • While your child is still young, open the account and start mentioning to your friends and family that gifted contributions to the 529 are always an option. When your child is old enough to understand, tell them about the account and that sometimes people give them gifts that way too. That will normalize it and make it a routine around birthdays and holidays.
  • If your family wants to help celebrate academic success, consider sharing report cards along with a link to your child's gift page if your 529 account is with Fidelity or an address to send checks if they want to give gifts directly to the account but don’t want to do it online.
  • People are more likely to give small amounts frequently rather than a large amount once. Help your friends and family feel comfortable with small contributions by showing how impactful saving small amounts can be over time. For instance, a $50 gift contributed to the account today, could potentially be worth nearly $200 in 20 years.3 Consider educating friends and family about the power of compound interest and saving. It's important to emphasize how financially meaningful contributing even a small amount to the college fund could be. You could even show them the hypothetical above that illustrates growth potential over time. With more money available to earn returns, the snowball effect of compounding could potentially help you hit your savings goal sooner than you would without those gift contributions.
  • After you’ve introduced the idea of gifting to your child's 529 account, leave it up to the gifter to decide how much money they would like to give—and how they would like to do it. You can offer to deposit checks or cash gifts too.
  • If you have the option, posting the link to your child's gift page on social media could be helpful—that way everyone who's interested in your child's educational growth can help out.
  • For birthdays, include the link to your child's gift page in your digital party invitation and explain in a short note that making a contribution to the 529 savings account is an option if they want to give a gift.
  • Holidays can be a big deal. If you're like many people, you may feel like you already have enough toys and could even go into business selling them. At the same time, you may be reluctant to tamp down on the gift-giving fun. Gifts to your 529 account could be the answer. Once you've set your child's expectations for gifts and educated them about their college fund, let your family know that contributions to the 529 account will be celebrated with a high level of fanfare from everyone. That doesn’t have to mean a ban on fun gifts, of course, but striking a balance could reduce clutter and toy-overload—while boosting college savings. A survey from Fidelity found that many parents would like to see a 2-to-1 split between traditional gifts and college savings: 65% traditional gifts and 35% college savings.4
  • Graduations of all kinds are often celebrated—as they should be, right? When the pre-K or 5th grade graduation rolls around, if your friends and family are inclined to give gifts, think about encouraging them to give a small personalized gift from their own alma mater (t-shirt, socks, stuffed animal, a graduation photo, or keepsake) along with a contribution to a 529 account. That could help reinforce the importance and relevance of a college education to the child.
  

You could even get your child to actively participate in saving by keeping them updated about the balance in their 529 account. Give them the option of saving some of the money they get as gifts or allowance. On birthdays and holidays, you could offer to match any cash gifts put toward college. Family members might be interested in doing that too!

Gifting can help with estate planning

Gifts to 529 accounts can also help with estate planning. Gifters can contribute up to $17,000 in 2023 ($18,000 in 2024) to a 529 account per person, per year with no gift tax ramifications. So a married couple could gift up to $34,000 per account, per year in 2023 ($36,000 in 2024) without having to pay a gift tax or erode their lifetime gift tax exclusion. Once the annual gift has been made to the 529 plan, the money is no longer considered part of the gifter's estate, for estate tax purposes.

The good news for people who receive gifts: When someone makes a gift to your 529 account, you generally will not owe taxes on the amounts.

The gift of education

However people choose to give, whatever amount they choose to give, every little bit helps to fund your child’s educational success. That can help give your child the tools they need to thrive throughout college and for the rest of their lives.

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More to explore

1. Trends in College Pricing, 2023. College Board Advocacy and Policy Center. 2. Interviews with customers were conducted by Fidelity Investments' user experience researchers on Feb. 14, 2019. 3. Hypothetical example assumes a one-time $50 contribution, an annual rate of return of 7.5% and no taxes on any potential earnings within the 529 College Savings Plan account. 4. 2018 College Savings Indicator Survey, Fidelity Investments, August 2018.

Please carefully consider the plan's investment objectives, risks, charges, and expenses before investing. For this and other information on any 529 college savings plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view one online. Read it carefully before you invest or send money.

The UNIQUE College Investing Plan, U.Fund College Investing Plan, DE529 Education Savings Plan, AZ529, Arizona's Education Savings Plan, and the Connecticut Higher Education Trust (CHET) 529 College Savings Plan - Direct Plan are offered by the state of New Hampshire, MEFA, the state of Delaware, and the state of Arizona with the Arizona State Treasurer's Office as the Plan Administrator and the Arizona State Board of Investment as Plan Trustee, and the Treasurer of the state of Connecticut respectively, and managed by Fidelity Investments.

If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, Arizona or Connecticut resident, you may want to consider, before investing, whether your state or the beneficiary's home state offers its residents a plan with alternate state tax advantages or other state benefits such as financial aid, scholarship funds and protection from creditors.

Units of the portfolios are municipal securities and may be subject to market volatility and fluctuation.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

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