Looking to give a holiday gift that will help set a young one on the right financial path? A savings bond or 529 account contribution probably won’t be the gift that gets the most attention when opened, but it just might end up being the most appreciated. Parents, grandparents, and other interested adults can give financial gifts to children that can help secure their future, whether it helps them save for a first car, college, or a 澳洲幸运5官方开奖结果体彩网:down payment on a house.

Financial Gifts

“Parents and grandparents should consider making financial gifts because they can help childreꩲn achieve something that would otherwise not be possible,” financial advisor and partner with TBH Global Asset Management said. “This can include things like medical school, which has now become unaf🐠fordable for many, or helping a child get through a short-term hard financial situation.”

Whether your financial gift helps a child 澳洲幸运5官方开奖结果体彩网:pay for college, travel across Europe for the summer, or sparks an interest in saving and 澳洲幸运5官方开奖结果体彩网:investing, the young person can thank you because, as Davis noted, “You are personally invested, physically and financ♏ially, in the things that are importaღnt to them.”

Savings Bonds

Savings bonds make excellent financial gifts because they can grow steadily by earning interest. Treasury securities are debt instruments that include 澳洲幸运5官方开奖结果体彩网:Treasury bills, notes, bonds, 澳洲幸运5官方开奖结果体彩𒅌网:Treasury inflation-protected securities (TIPS), andಞ savings bonds. Most Treasury securities are called “marketable” securities because they can be bought and sold in secondary markets after they are purchased from the Treasury.

澳洲幸运5官方开奖结果体彩网:Savings bonds differ from other Treasury securities in a few w⛄ays🐓:

• Savings bonds are “non-marketable” and therefore cannot be traded on a 澳洲幸运5官方开奖结果体彩网:secondary market.
• Minors can own savings bonds.
• Savings bonds are available for purchase as gifts.

The money you pay for a savings bond represents a loan to the U.S. government. In exchange for the loan, the savings bond continues to earn interest for up to 30 years. Any time after 12 months, the savings bond can be redeemed for its 澳洲幸运5官方开奖结果体彩网:face value, plus any interest it has earne🐼d; however, if the bond is redeemed before it is five years old, you will forfeit the last three months’ interest.

Savings bonds are available as 澳洲幸运5官方开奖结果体彩网:Series EE or 澳洲幸运5官方开奖结果体彩网:Series I bonds, both of which accrue interest monthly and compound interest semi-annually. The biggest difference between the two is the interest rate you receive. Series EE bonds issued on or after May 1, 2005, earn a fixed rate of interest. The interest rate of Series I bonds is based on both a fixed 澳洲幸运5官方开奖结果体彩网:rate of return and a variable semiannual rate, indexed for inflation. EE bonds are guaranteed to double in value from their issue price no later than 20 years after their issue date to reward longtime bondholders.

You can purchase a digital savings bond as a gift through the TreasuryDirect website, a secure, web-based system operated by 🐎the U.S. Department of the Treasury. Here are the basics for buying digital savings bonds:

1. Go to .
2. Log into your TreasuryDirect account (or open one in your name).
3. Purchase the type of savings bond you wish (Series EE or Series I), in the desired 澳洲幸运5官方开奖结果体彩网:denomination ($25 to $10,000).
4. Deliver the savings bond gift to the recipient’s TreasuryDirect account.
5. Print out a gift certificate to give to the recipient.

You will need to know the recipient’s legal name, 澳洲幸运5官方开奖结果体彩网:Social Security number, and TreasuryDirect account number. For a minor under 18 years old🧔 to receive a savings bond as a gift, the parent or leꦡgal guardian must set up a Minor Linked Account within their own TreasuryDirect account. If the child’s parent/guardian does not set up an account (for whatever reason), you can still buy the bond, hold it in your own account’s “Gift Box,” and transfer it at a later date.

The reason you need to provide the child’s 澳洲幸运5官方开奖结果体彩网:Social Security number is that the bond applies to the recipient’s annual bond purchase limit, not yours. The annual purchase limit for savings bonds is a combined $10,000 in Series EE electronic bonds, $10,000 in Series I electronic bonds, and $๊5,000 in paper Series I bonds.

529 Contributions

It’s no secret that post-secondary education is expensive. According to the College Board, the average cost of tuition and fees (not including room and board) for the 2023-2024 school year was $11,260 for in-state public colleges, $29,150 for out-of-state public colleges, and $41,540 for private, not-for-profit colleges.

“One of the best ways to help a child financially while limiting your own 澳洲幸运5官方开奖结果体彩网:tax liability is the use of 529 college plans,” Davis said. A 529 College Savings Plan is a 澳洲幸运5官方开奖结果体彩网:tax-advantaged plan that allows families to save for future college expenses. These are typically state-sponsored investment plans, and each state has different requirements and benefits, including tax advantages. There are two types of 529 plans: savings and prepaid plans.

• 529 Savings Plans: These plans work similarly to other investment plans such as 401(k)s and IRAs for retirement in that your contributions are invested in mutual funds or other investment products. As a state-sponsored investment plan, the state coordinates with an asset management company (such as Vanguard) to handle the investment according to the state's plan features. The owner of the account (i.e., the parent) deals directly with the asset management firm, rather than with the state. The beneficiary (the child) is the person for whom the account is set up and who will use the money for college.
• 529 Prepaid Tuition Plans: Prepaid tuition plans, also called guaranteed savings plans, are administered by states and higher education institutions. They allow families to plan for future college expenses by prepaying tuition and locking in today's tuition rate. The program pays future college tuition at any of the state's eligible institutions. If the student goes to an out-of-state or private college or university, an equal amount of money is distributed.

“I strongly advise my clients to fund 529 plans for the unsurpassed income tax breaks,” Davis said. “Although the contributions are not deductible on your federal tax return, your investment grows tax-deferred, and distributions to pay for the 澳洲幸运5官方开奖结果体彩网:beneficiary's college costs come out federally tax-free. Rules for 529s do vary by state, and I would encourage everyone to understand their state’s rules. For example, your own state may offer some tax breaks also (such as an upfront 澳洲幸运5官方开奖结果体彩网:deduction for your contributions or income 澳洲幸运5官方开奖结果体彩网:exemption on with🎃drawals) in addition to the federal treatment."꧒

In December 2019, President Trump signed the , designed to improve the retirement system for🅘 Americans. Part of the act made changes to 529 plans that broadened the educational institutions eligible fo🤪r their use.

Now, qualified higher education expenses, for which 529 plans may be applied, include expenses for apprenticeship programs. The act also has introduced distributions for “Qualified Education Loan Repayments,” which can be used to pay the principal and/or interest of qualified education loans, limited to a lifetime amount of $10,000. This limit is per person, but an additional $10,000 may be distributed as a qualified education loan repayment to satisfy outstanding student debt for each of a 529 plan beneficiary’s siblings.

Other Types of Financial Gifts

Savi꧃ngs bonds and 529 contributions are just two of many different financial gifts that are appropriate for children. You can also consider giving the f♏ollowing:

• Stocks: You can gift or 澳洲幸运5官方开奖结果体彩网:transfer stock you already own, or you can purchase individual shares through an online brokerage that supports stock gift-giving (such GiveAShare, among several others). Often, you can even obtain a paper stock certificate for the shares to give to your loved one.
• Cash: Cash is always a welcome gift, but it might be most effective if it is money earmarked for a specific purpose, such as paying for a car or summer camp or to pay down an adult child’s debt (such as student loan or 澳洲幸运5官方开奖结果体彩网:credit card debt).
• Financial advice: A trip to a qualified 澳洲幸运5官方开奖结果体彩网:financial planner can help even young children understand the value of money, savings, and investing.

The Bottom Line

For 2024, you are allowed to give up to $18,000 per year to as many people as you want, without any tax consequences to you. It will be $19,000 in 2025. (For 2023, it was $17,000.) This can include a gift to a 529 account. B🌳ecause tax laws are complicated, work with qualified tax professionals to determine what tax implications, if any, your financial gift may have. With such planning, choosing this type of present for a child can ensure that you can bestow financial gifts while at the same time minimizing tax consequences.