A 2014 study by Fidelity Investments found that 90 percent of grandparents said they would likely contribute to a grandchild’s college savings fund in lieu of other gifts if asked.
And thanks to new tools, it’s becoming easier to give a 529 college savings plan.
“In the early days, you always needed the account number in order to make a gift,” said Mary Morris, chair of the College Savings Foundation, a nonprofit that works to build public awareness about 529 plans, and chief executive of the Virginia529 College Savings Plan.
But now it can be done electronically, “no account number required,” she said.
So how do you make it easy for loved ones to contribute?
Create a website. In the past, you generally had two options. You could ask for a check and deposit the money into a 529 plan yourself, or send your account information to friends and family. The first required gift givers to trust that the money would be put toward college savings, and the second required you to share personal information.
As a solution, 529 plan sponsors have been rolling out gift registries and other online tools with minimum contribution amounts as low as $25.
Starting last year, Fidelity Investments, for example, introduced the option for 529 account holders to create personal Web pages through which gifts are made.
The website is customizable. You can include a picture of the child and details, like what she wants to study in school.
A link to the site can then be shared by email, party e-vites, or Facebook and other social media. When gifts are made, funds are taken electronically from the giver’s bank account and deposited into the 529 plan. There are no fees.
If you don’t have a Fidelity account, you can create a website through third-party provider GiftedPath. The company works with select 529 plans to deposit funds directly into accounts. If you don’t have a participating plan, the site will send contributions electronically to you.
It’s free to sign up and create a website, but gift givers are charged a small fee when making a contribution.
Send a gift code. Other 529 plans may require you to provide friends and family with a gift code so that the money is deposited into the correct account.
In other cases, gift givers may still have to print out a coupon and mail a check to the 529 plan sponsor. An account number is not always necessary, but they will need to know the beneficiary’s name and date of birth.
Sharing at least that information may be worth it, though.
“If you can get friends and family to put money in, even small amounts over time will make a big difference,” Morris said.