Birthday gifts for grandchildren…529 Plans

It’s September.  In my family, that means birthdays and gifts made to 529 Plans. September 2nd was Jackson’s birthday. Today, September 26th, is my daughter’s birthday and tomorrow, September 27th, is Dylan’s birthday.  Jackson and Dylan are my two grandsons.  jackson

When my granddaughter Jovie had her first birthday party I was overwhelmed by the amount of wonderful gifts she received from family and friends.  Her birthday is in January which follows another big gift giving day, Christmas.  So I decided to begin giving gifts of money as a long-term gift to my three grandchildren by setting up 529 college funds.

According to, “A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996.”

Now, my grandchildren each have a 529 Plan.  I put $50 in each account when they were born.  I chose this amount because my Dad gave his grandchildren a $50 savings bond upon their births.  For their birthdays I add another $100 to the accounts.  It’s not a lot of money but hopefully it will grow into a nice high school graduation gift years from now.

Thirty-one years ago when my daughter was born, I began saving for her college by buying saving bonds and opening a mutual fund under a custodial account.  I added to the account monthly.  As I remember, she had to start paying taxes on the earnings when she was about 12 years old.  That is not the case with a 529 Plan.

There are many benefits, including tax savings, to opening a 529 Plan according to

  • They offer income tax breaks.  Earnings in a 529 Plan grow federal tax-free and will not be taxed when the money is taken out to pay for college.  That benefit alone makes it a better deal than a custodial mutual fund.
  • Your state may offer tax breaks as well.  Most states currently offer residents a full or partial tax deduction or a credit for 529 Plan contributions.
  • They are easy to set up, monitor and to change investment options.  You can deposit up to $14,000 per year as an individual ($28,000 for married couples filing jointly).

I setup my 529 Plans by going to  If you bank online, setting up and administering a 529 Plan will be a piece of cake.  Kind of like a piece of birthday cake! Happy birthday Jackson and Dylan!

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