A very valuable employee has invited us to his daughters Quinceañera. We would like to gift her a sizable dollar amount however my husband would like to set this money up to be used for college or perhaps a trade school. We are not sure of her plans as we have never met her. I do know we would like her to have this money for her future. What would you recommend? Can we open a 529 for her?
Quinceañera – College Fund
byu/deanalynn72 inpersonalfinance
Posted by deanalynn72
6 Comments
It’s very possible they already have a 529 for her, which you could contribute to. Anyone can contribute to a child’s 529 so that could be an option.
> Can we open a 529 for her?
One of the biggest hurdles for doing this would be that the parents need to be willing to release the child’s SSN in order for the child to be set as beneficiary on the 529.
Sometimes parents already have a 529 setup. Or there is already one setup by someone in the family for the child.
It may be easier to direct your contributions to the existing 529.
Downside is that you lose control over the account.
Everything has a pro/con.
To open a 529, you need the beneficiary’s SSN. If you don’t have that, best you can do is contribute to a currently existing 529 (which the parents likely own and can clean out at anytime) and trust the owner to do the right thing. It sounds like you mostly want to recognize the parent though, so that might be okay.
I wouldn’t set up a 529 for an employee’s kid. Aside from the SSN issues, what if your employee is no longer with you for whatever reason by the time she’s in college? Are you going to keep track of the family?
I’d ask the employee if they have a 529 you can contribute to. If not, or if you really want to make sure it goes to education, I’d gift her now however much money you’re comfortable with using in whatever way. Then give her an education grant when the time comes where you either pay the school directly or reimburse documented educational expenses.
Don’t try to open a 529 until you’ve checked w parents – and unless this gift is significant, I would think 10k or more.
There’s no need for multiple 529s with small amounts in them – it’s too complex, and you said have no idea what her plans are. Maybe her education is already covered. I would ask if you can contribute to an existing 529 or give her a check with a note that it’s for her education.
Give her a check. Be sure that if you do it for his daughter, you’re prepared to do it for all your employee’s kids