MEFA Encourages Giving Gifts Differently this Holiday Season
Boston [December 2, 2021] - MEFA encourages families and friends to consider giving toward a child's savings account in lieu of gifting another toy. With supply chain disruptions occurring across the country, this year offers even more of an opportunity to give a gift that will benefit a child's future.
Contributing to a child's savings account takes no time at all; for accounts that allow direct online gifting contributions, it's as easy as sending along the funds digitally, as you would transfer money between friends. And if the child doesn't have a dedicated account? Mail a check, or use a digital wallet application for quick and easy money transfers.
A recent College Savings Foundation survey revealed that 45% of parents are planning to ask family and friends to make a contribution to a 529 Plan instead of giving a material gift. Moreover, Fidelity Investments' 2021 Holiday Gifting and College Savings Survey found that parents prefer that gifts be split 64% vs. 36% between traditional holiday gifts and college savings account contributions for their children.
It's the gift of hope and aspiration; encouraging children to think about their future. A 2013 research brief published by the George Warren Brown School of Social Work at Washington University showed that students who know they have savings allocated for college are 31% more likely to plan on attending college than children without college savings.
The gift of savings offers benefits for parents, children, and even the gift-giver:
- A contribution will benefit the child's future, and will also help lessen the burden felt by parents and loved ones to reach a family's savings goals.
- Gift-givers may contribute toward a child's savings account, such as the U.Fund 529 College Investing Plan or the U.Plan Prepaid Tuition Program, toward an ABLE Account, such as the Attainable Savings Plan, or toward a family's traditional savings account.
- Many savings accounts offer an online gifting option, allowing gift givers to make direct contributions to the beneficiary, eliminating the need for cash or a check exchange. If you'd like to include a tangible gift, consider purchasing a book for the recipient and include a note inside indicating that a contribution toward their future has been made.
- Young children may not even notice fewer or smaller toys, and the gift creates an opportunity for parents and children to talk about the future and how a foundation is in place for them as they grow. The money not spent on toys and invested in future savings will grow over time and may reduce the child's future debt.
Families saving with the U.Fund 529 College Investing Plan or the U.Plan Prepaid Tuition Program have an added benefit; savings allocated to their accounts by December 31st may qualify for the 2021 MA State Tax deduction.
If you are interested in learning more about how to get started helping a child save for the future, visit mefa.org/gifting.
About MEFA's Savings Plans:
The U.Fund 529 College Investing Plan
The U.Fund 529 College Investing Plan allows families to save for college with tax-free earnings and tax-free withdrawals when used to pay for qualified educational expenses. There is no minimum contribution needed to open an account. To learn more about the U.Fund and all its benefits, visit fidelity.com/ufund. For those saving in the U.Fund 529 College Investing Plan, it's quick and easy to set up a U.Fund college gifting page that connects directly to an account, and account owners can simply share the link for gift-givers to contribute. For more information about setting up a U.Fund college gifting page, visit fidelity.com. Add tax deduction note here also qualifies Massachusetts residents for the college savings state tax deduction
The U.Plan Prepaid Tuition Program
The U.Plan allows families to prepay college tuition and mandatory fees at over 70 public and private colleges and universities across Massachusetts while locking in current prices. As one of the most stable and reliable prepaid plans in the nation, the U.Plan has no fees, no Massachusetts state or federal taxes on earnings, and also qualifies Massachusetts residents for the college savings state tax deduction. To learn more about the U.Plan, visit mefa.org/uplan.
The Attainable Savings Plan
The Attainable Savings Plan provides a means for individuals with disabilities and their families to save in a tax-advantaged account for health and personal care expenses. Eligible individuals can save up to $15,000 a year, and still will receive disability benefits. Investment earnings and withdrawals are free from federal taxes when used to pay for qualified disability expenses. Attainable accounts are made possible by the Achieving a Better Life Experience (ABLE) Act, which authorized states to establish tax-advantaged savings programs for individuals with disabilities and their families. To learn more about the Attainable Savings Plan, visit mefa.org/attainable.
MEFA is a not-for-profit state authority, not reliant on state or federal appropriations, established under Massachusetts General Laws, Chapter 15C. MEFA's mission, since its founding in 1982, has been to help Massachusetts students and families access and afford higher education and reach financial goals through education programs, tax-advantaged savings plans, low-cost loans, and expert guidance. All of MEFA's work aligns with the ever-present goal to support the independence, growth, and success of Massachusetts students and families. Visit mefa.org to learn more or follow MEFA on Twitter @mefatweets, Facebook at mefaMA, LinkedIn, and Instagram.