How to Make a 529 Gift Even Better
A contribution to a 529 education savings plan is one of the most meaningful gifts you can give a child or young adult this holiday season. With The Education Plan®, you can open an account in about 15 minutes with many flexible contribution options. Or you can send a gift straight into an existing account using Ugift®. But, how do you wrap a 529 gift?!
You Can Still Give Them Something to Open
A 4 year old can’t play with a 529 contribution on Christmas morning. In a season full of ribbons and wrapping paper, a card with a contribution amount might be overlooked. Parents and grandparents like to see children shout with joy at celebrations and holidays. So, sometimes, a 529 contribution gets bypassed in favor of a gift with a bigger wow-factor.
One solution is to pair the contribution with a small tangible gift that is representative of what the money is being saved for. That could be a set of paintbrushes for an aspiring artist. Glow-in-the-dark ceiling stars for the kid who wants to be an astronaut. Or a set of books about dinosaurs for the budding paleontologist. Then add a card that explains the gift in a simple sentence a child can understand: “This is for the school you’ll go to someday. We believe in you.”
If the child is old enough, you might opt to show them the funds invested in the account (you could write it on the card) and the number that was in the account last year. Add to your gift by discussing the investment market, including earnings potential.
Use it to Start a Conversation
Here is a conversation some families never have until high school graduation nears: What do you want to do when you graduate? Perhaps the answer is to attend a four-year university. If it isn’t, don’t fret, funds can be used at community colleges, trade and vocational schools, and registered apprenticeship programs, and they cover qualified expenses like tuition and fees, books, supplies and computers and more.
If you haven’t already, start a meaningful conversation and ask them what they want to be. Write the answer down on the card. Then pull the card out next December and see whether the answer has changed. It often does, and that’s great. The savings in a 529 account can move with them no matter what they decide they want to be.
Make It a Tradition
Kids tend to remember a story around a gift longer than the gift itself. Sharing a gift contribution and the amount that is in their account could become a holiday tradition they look forward to. And it will let them know that they have people who believe in them and are saving for their future from a young age.
A modest amount given every year, with time to grow, can add up to far more than one generous check before they graduate high school. Account owners can set up automatic monthly contributions in a few minutes, and gift givers can make their Ugift contribution recurring, too. Once it’s set, it happens without anyone having to remember it in the middle of a busy December.
How to Give a 529 Gift This Year
If your loved one already has an account with The Education Plan, ask the account owner for their Ugift code. Friends and family can use it to contribute online with as little as $25; no account of their own is required. You can find details on the gifting page.
If there isn’t an account open yet, you can open one yourself. Anyone 18 and older can open an account, including parents, grandparents, aunts, uncles, friends and other loved ones, and name a beneficiary of their choosing.
New Mexico families get an added benefit: contributions to The Education Plan may be eligible to be deducted from New Mexico taxable income, whether you are the account owner or not. That means grandparents or other loved ones who give a contribution to a parent-owned account may be eligible for the tax deduction on their gift.
A Gift They Grow Into
You don’t have to choose between a gift a child loves today and a gift that matters later. Give both. Open an account or make a contribution into one this holiday season. With 15 minutes, many flexible contribution options, and a card that tells them you believe in them, you can make a tremendous difference in their future.
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
