A 529 Plan is The Best Holiday Gift This Year, and Next Year, and…
The holiday season is here. And if you are like many Americans, you may have put off shopping for the kids until the last minute. But before you rush out to grab the last Mario Kart, Groot Groove ‘n’ Grow—or whatever has been labeled this year's “must have” toy—remember that this year’s fad will soon be forgotten.
Instead, consider a gift you can give this year, next year, and many years to follow that will be appreciated for decades to come: a 529 account with The Education Plan®, a tax-advantaged savings option that will have a positive impact long after Groot is on its way to Goodwill.
A 529 account can be used to cover a number of expenses tied to education, and contributions you make today have the ability to increase in value over time. Gifting a 529 account or a contribution to an existing 529 account says that you care about the recipient’s long-term future and happiness.
They’ll Say, ‘Thank You’ Today and Mean it Even More Years from Now
According to recent statistics from the Education Data Initiative, the average federal student loan debt balance is over $37,000, and the average total balance (including private loan debt) may be as high as $40,500.
Education can be expensive, and a growing number of students graduate with student loan debt that can put off other investments like home ownership and retirement. A 529 account can help reduce the financial burden on both the recipient and their parents, so it’s the perfect gift for grandparents, aunts, uncles, and family friends.
Funds from a 529 account can be used for any level of higher education at in-and out-of-state colleges, as well as trade schools, online universities, and even certain schools abroad. And the funds don’t just cover tuition. Funds from 529 accounts cover room and board, books, computers, and more. 529 funds can also be used to pay for K-12 tuition and apprenticeship expenses.
Your Gift Benefits You Too
New Mexico is one of only a few states in the nation to provide an unlimited state tax deduction for contributions to its 529 plan. (The Education Plan is New Mexico’s direct-sold 529 plan). That means that New Mexico taxpayers have the option to deduct contributions to The Education Plan dollar for dollar from their state taxable income as long as the funds are used to pay for qualified educational expenses.
It’s Easy to Set Up
To open a 529 account with The Education Plan, you’ll need to provide information about the beneficiary. Opening an account is easy and only takes about 15 minutes. There is no minimum initial contribution requirement and there are no age or income restrictions. You also have the option of setting up automatic contributions, so you won’t have to worry about what to get them next holiday season, either.
5 Tips to Encourage Friends and Family to Make Contributions
Asking for money is never easy. But with the right approach and timing, you could be doing your friends and family members a favor by having them take part in saving for a future learner’s education.
1 – Know Your Audience
You know best who your child’s strongest advocates are. This may range from family members and long-time friends to godparents, mentors, co-workers and more!
2 – Make it Part of an Invitation
How many first birthday parties have you been to? Remember shopping for toys for a 1-year-old who only wanted to play with the gift wrap! The Education Plan makes asking for gifts into your 529 plan easy with Ugift. You can generate a sharable code that is linked directly to your account electronically. When you send the invitation, include the code, and say, “in lieu of presents, please consider….”
3 – When They Ask You What Your Child May Like, Tell Them
Holiday times are frantic for most people. Chances are your parents, siblings, or friends may be at a loss as to what to get your kid this holiday season. So, when they ask you “what do they want this year?” tell them that there is a 529 account they can contribute to. This can save them precious time and effort as well in searching for gifts online and in-store.
4 – Give and You Shall (Probably) Receive
You may have a friend or family member who has a 529 account set up for their children. Contribute to their account as a gift. Then, the next time the topic of holiday shopping comes up, you can say that you have found the perfect gift and mention that your child has a 529 account that they can contribute to.
5 – Don’t Forget ‘Thank You’ Notes
Send “thank you” notes to everyone who contributed. Consider giving updates on the progress of your savings and how much their contributions mean to you and your child’s future. Then when your child is old enough to hold a pen, have them sign the note and eventually write the notes themselves.
Ready to Get Started?
Opening an account with The Education Plan only takes about 15 minutes. If you already have an account, you can log in to create your gifting code to share with friends and family.
Frequently Asked Questions
A 529 plan is a tax-advantaged investment account that is designed to grow savings for future education expenses for a specified beneficiary. 529 plans offer unique benefits and features that make them an appealing strategy for education related saving.
A 529 plan can be used for “qualified educational expenses.” For federal tax purposes, qualified educational expenses include:
- Tuition and fees at accredited higher education institutions
- Books
- Supplies and equipment
- Room and board for beneficiaries attending on at least a half-time basis.
- Computer technology, equipment, and internet access
- Up to $10,000 a year for K-12 tuition and expenses (Limit increase to $20,000 in 2026)
- Expenses for educational special needs services
- Transfers to an ABLE account for the beneficiary (transfer subject to annual limit)
- Apprenticeship expenses
- Up to $10,000 for student loan repayment
- Credentialing expenses and certification programs
- Roth IRA rollover for the beneficiary
If you're not sure if an expense is considered "qualified," we recommend consulting with a tax professional or advisor. Unqualified expenses will be treated like ordinary income: state and federal taxes will apply, with a 10% federal penalty for withdrawals from your 529 plan used to pay for them.
New Mexico residents can deduct contributions to The Education Plan from their state taxable income each year. This includes contributions made to an account that you are not the account owner of.
You cannot deduct contributions from federal income taxes.
Any person at least 18 years old with a valid Social Security Number (SSN) or Tax Identification Number (TIN) can open a 529 account. The account holder chooses the investment options, designates a beneficiary, and requests the distribution of funds.
The cost of college continues to rise, including tuition, housing, food and supplies, so it’s important to begin saving as soon as possible. You can learn more about how much a typical college education costs on our Cost of College page. It’s never too early or too late to start.
The Education Plan offers a variety of investment options to fit you and your family’s needs, risk tolerance and goals. You can see all of the available investment portfolios on the investments page.
Yes, you can use up to $20,000* a year to cover tuition and expenses for K-12 education.
Qualified K-12 expenses include:
- Tuition (public, private, and religious)
- Curriculum materials, books (including digital/online) and instructional materials
- Tutoring and instructional classes**
- Fees for a nationally standardized norm-referenced achievement test, an advanced placement examination, or any examinations related to college or university admission
- Dual enrollment program fees
Educational therapies for students with disabilities provided by a licensed or accredited practitioner or provider, including occupational, behavioral, physical, and speech-language therapies
*Starting in tax year 2026. The annual limit is $10,000 in tax year 2025 and permitted for tuition only.
**Tuition for tutoring or educational classes outside of the home, including at a tutoring facility, but only if the tutor or instructor is not related to the student and—
(i) is licensed as a teacher in any State,
(ii) has taught at an eligible educational institution,
or (iii) is a subject matter expert in the relevant subject.
You can open an account with The Education Plan online or by mailing in the enrollment form. In order to open an account, you will need the following information:
- Your social security number or TIN
- Your address
- Your bank account information (in order to fund the account)
- The beneficiary’s social security number or TIN
- The beneficiary’s birthday
-The beneficiary’s address
