Holiday gift-giving can be a challenge; what can you give that won’t be regifted, thrown out, returned, or relegated to a drawer or closet? How about something that has long-term value? That can mean different things including providing funds for education, educating a young person on the importance of savings and the value of compound growth, and supporting a charity.

Paying for education

Education is a valuable gift that can provide a lifetime of benefits. According to the U.S. Bureau of Labor Statistics Career Outlook published in April 2024, graduates with a bachelor’s degree earn 66% more than those with just a high school degree. College savings plans are one of the most popular ways for grandparents and family members to support the students in their lives.

Growth in a 529 plan is tax-free if distributions are used for qualified expenses. These expenses include college tuition, room and board, and tuition for K-12 education, up to $10,000.  If there are remaining assets in a 529 plan after the beneficiary has finished school, those funds can be transferred to another family member. Additionally, up to $35,000 can be converted into a Roth IRA in the beneficiary’s name. It’s advantageous to establish 529 plans as early as possible to allow investments more time to grow tax-deferred. Check out our post on college savings plans for more information.

You can also pay tuition directly for a family member or friend. If you pay the institution directly, it’s not considered a gift for gift tax purposes.

providing education

As helpful as school and college can be in terms of earning wealth, it’s also important to educate young people on how to accumulate and steward wealth. Consider opening a custodial account for someone under 18 to help them learn about investing and the power of growth over time. One way to do this is if the recipient has earned income, to help them open a Roth IRA and contribute to that. Up to $10,000 can be used toward the down payment on a home if the account has been open and funded for at least five years.

the gift of charity

Charities use the money they receive to improve our communities – an investment that gives back dividends over time. Many people make charitable gifts at year-end, but you can also help someone else make a charitable gift during the holidays. For young people, it can be a good way to start a conversation about the importance of giving back. For the person who has everything, a gift card that allows them to choose the recipient organization is a creative way for you to learn what’s important to them. If they have a favorite charity, you can make a gift directly to that organization on their behalf.

Consider combining the returns on education and the impact of charitable giving by supporting or starting a scholarship at your alma mater or favorite institution.

The Fulcrum team can help you determine what type of giving is best for your situation, including how much to gift and what assets to give. Talk to your advisor if you think a gift that grows with time may be the perfect present for someone on your list.