If you want to make a gift to a family member’s (perhaps a grandchild’s) college savings fund, Section 529 plans can be the perfect vehicle. Here are some strategies.
Give the parents a check along with a request the money be placed in a Section 529 account. Unfortunately, you have no control over how the money is actually used.
Set up the account yourself with the child as beneficiary. Make the contribution and let the parent know what you’ve done. You retain control but the parent may not feel grateful because you still own the account.
If the parent has already established a 529 account, send your contribution directly to the plan. This gets the job done but involves work on your part, such as first obtaining an account number (and perhaps a deposit coupon) from the parent.
If a 529 account has been established, give the parent a check made out to the name of that 529 plan. Then the parent will be responsible for sending in your check to the program.
You may prefer Number 4 because you don’t have to ask the parent for the account number and it passes control of the contribution to the parent, where it belongs. Because you made out the check to the 529 plan, you can be sure that it will be used for that purpose.
