A smart way grandparents can help with college savings

published September 27, 2024

As higher education costs continue to rise, more families are turning saving for college into a family affair. A 529 plan makes it easy for others to get involved because everyone who wants to contribute can, regardless of who owns the account. For grandparents, this can be a satisfying and simple way to help grandkids pay for higher education.

Superfunding an Account

One of the biggest reasons for grandparents to contribute to a 529 plan is the option to “superfund” an account. With a monetary gift, they may face a federal gift tax that sets a limit on the amount an individual or family can gift before facing a tax consequence. This amount changes from year to year. A 529 plan has unique rules that allow individuals to superfund an account by making a lump-sum contribution of up to five times the annual gift tax amount as if it were contributed over the next five years. For the tax year 2024, grandparents or anyone can accelerate gifting with a lump sum gift of $90,000 for single filers or $180,000 for joint filers.¹

The benefit to superfunding a 529 plan is that the money is in the account longer, giving it a few extra years for potential growth.

Contributing with Ugift^®

Another way to contribute to a college savings account is with Ugift. Whether it’s a birthday, holiday or other special occasion, there is never a wrong time to give the gift of higher education. To contribute, the account owner can simply log into their account and send a Ugift invitation to family and friends. It’s then easy for them to contribute online from their bank account or to mail a check. Families can find information on this process at BrightStart.com/resources/gifting.