Kanye West has opened a 529 college savings plan for Gianna Floyd, the daughter of George Floyd, according to CNN.com.
According to the article, West established the education plan to fully cover college tuition costs for the 6-year-old, said a representative for the rapper and reality star.
Gianna can use that 529 college savings plan to pay for college costs at any eligible college or university nationwide. You can use a 529 plan at more than 6,000 U.S. colleges and universities and more than 400 foreign colleges and universities. Some of these qualified costs include:
- Books and materials
- Computers and internet
- Some cases of room and board
- Repaying student loans
College savings plan work similar to a Roth 401(k) or Roth IRA by investing after-tax money in mutual funds or similar investments. Earnings accumulate on a tax-deferred basis and are entirely tax-free if used to pay for qualified education expenses.
A 529 college savings plan offers many investment options to choose. The 529 plan account will increase or decrease in value based on the performance of the investment options.
Over 30 states offer state income tax deductions or tax credits for contributions to a 529 college savings plan.
Opening a 529 Plan for a Non-Family Member
All 529 plans accept third-party contributions, regardless of who owns the account. That means anyone – grandparents, aunts, uncles, friends or even Kanye West can help save for college.
You can either make contributions to a 529 plan account that you own or make gift contributions to a 529 plan account owned by someone else, such as the child’s parent. You can also open a custodial 529 plan account for a child who is not a relative.
A 529 plan can be opened online or through a licensed financial advisor. You will need the 529 plan beneficiary’s date of birth and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) at the time of enrollment. If you don’t have this information, you may name yourself as the 529 plan beneficiary and change the beneficiary at a later date.
You can generally make a 529 plan gift contribution by check or electronic payment, depending on what the 529 plan allows. Many 529 plans have gifting platforms that make it easy for parents to ask for and receive college savings gifts via email or social media.