Give the Texas Tuition Promise Fund as a Gift
Not just parents, but grandparents, aunts, uncles and even friends can open a new contract or add to an existing account established by someone else.
Suggest a Contribution as a Gift
A contribution to your child’s Texas Tuition Promise Fund account is a wonderful suggestion when friends and family inquire about gift ideas for birthdays, holidays and other special occasions.
Contributing to your child’s college fund is a special gift that can help them prepare for college. And though the family will help you save, you will control how the money is spent.
Anyone Can Contribute to Your Contract
Anyone can help you purchase Tuition Units, including relatives, friends, or even your next door neighbor.
Please note, however, that the Purchaser will retain control over all contributions to the account (except for any state-funded contributions). Contributions may have gift or other tax consequences.
Gift Tax and Estate Tax Benefits
Family and friends can each purchase Tuition Units up to $14,000 per Beneficiary each year or up to $70,000 at once (using a special five-year proration period and assuming no other gifts have been made to the Beneficiary), without incurring a federal gift tax. To effect the five-year election, the contributor must file an IRS Form 709. If the contributor dies before the end of the five-year period, the applicable portion would be included in the contributor’s gross estate for federal estate tax purposes.
Purchases are generally treated as completed gifts, and qualify for the “annual exclusion” for federal gift tax purposes.
In addition, amounts contributed to purchase Tuition Units on behalf of a Beneficiary are generally excluded from a donor’s estate for federal estate tax purposes. Please check with your tax advisor for more information.
If establishing a new account, residency requirements apply to the Beneficiary. If the Beneficiary is not a Texas resident, then the Purchaser must be a Texas resident and the parent or guardian of the Beneficiary. Non-Purchasers or individuals designated as Successor Purchasers have no control over the Contract. Only the Purchaser (owner of the Contract) may direct transfers, rollovers, withdrawals, and changes in the Beneficiary.