Take your lump sums
Every little — and big — bit helps with the overall goal of paying for college. Someone like a grandparent, for example, can pitch in up to $16,000 ($32,000 for married couples) annually without gift tax consequences. Under a special election, one can invest up to $80,000 ($160,000 for married couples) at one time by accelerating five years worth of investments. Note that no additional gifts can be made to the beneficiary over the four years following the year in which the one-time gift is made. If the donor of an accelerated gift passes away within the five-year period, a portion of the transferred amount will be included in the donor’s estate for tax purposes. Consult with a tax professional regarding your specific situation. Tax deductions may be disallowed in the event of non-qualified withdrawals.
Share the wealth
As you grow in your career, your income may increase. Why not take part of that increase and apply it to your monthly contributions? You can make contributions right from your checking account, or possibly as a deduction from your paycheck that goes directly to your 529 savings plan. Revisit your savings strategy on an annual basis and make adjustments.
In addition, your job might offer annual bonuses that you can put part, or all, of toward your 529 savings plan account. Another annual way to contribute might be with tax refunds. Adding chunks like these toward your child’s future education can make a big difference, taking some of the weight off your and your child’s shoulders when it comes to potential debt later in life.
Even the smallest savings add up. Keep a spare-change jar near your front door for the whole family to join in the savings. You can count up the change on a quarterly basis and make a family contribution to the 529 savings plan.
If you have more than one plan, take turns with contributions. These plans are flexible and transferrable, so if one of your children’s funds has spare change of its own, you can easily transfer the account to another child.
Have skin in the game
As your teenager becomes more independent, she might take on a part-time job. If so, it’s a great time to sit down together and review her paycheck to decide how much to put toward college.
A contribution of 10% may be a good place to start. Establishing a habit of saving when children are young can create financial discipline over time that will benefit them way past their college years. It's important to remember that every bit counts and adds up over time. As you revisit, you can watch how your contributions can grow!