Author Topic: Easy Credit Card spend for those of us with tuition - Giftofcollege.com  (Read 3728 times)

Offline terpy

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For those of us with kids in jewish day school, we have huge tuition bills. The new tax law passed a couple months ago has a provision that now allows paying private school tuition expenses (K-12) from 529 plans. You are allowed to have qualified distributions from the 529 plan up to $10,000 per year per child.

There's a company called Giftofcollege.com that allows you to use credit cards to purchase gift cards which then gets directed to a 529 plan. You can either do it online for a $6 fee per $200 gift card, or Toys R Us/Babies R Us sells them for a $6 per $500 GC. So there's now a VERY easy method to Manufactured Spend $10k per kid. Here's what I did:

Step 1a: Set up a Giftofcollege.com account. You'll eventually see which 529 plans they support. Many of them are Fidelity, but they have quite a few others. I chose the UNIQUE/NH plan. You'll have to create sub-accounts for each child.

Step 1b: Set up your 529 plan. I already use Fidelity, so creating a 529 plan was pretty easy. Set up an account for each child.

Step 2a: Purchase Giftofcollege.com gift cards. Either buy online for a 3% fee, or at Toys R Us for 1.2% fee.
Step 2B: Load the GC info into your online giftofcollege.com account.

Step 3: Wait 1-3 weeks for the GC to deposit into your 529 plan. It took just over 2 weeks for my 1st load to deposit.

Step 4: Withdraw the money from the 529 plan to your primary account of choice. Can be a regular Fidelity account, or you can EFT to your normal checking account.

Pay your school as you normally would. If you greatly desire, you can direct your 529 plan to pay the school directly with a check, but that's not required.

Wash, rinse, and repeat!


Couple of things -
You can withdraw from the 529 directly to your normal back account. You do NOT have to send a check directly from the 529 to your school. All the tax law cares about is "Did you have qualified tuition expenses, not to exceed $10,000?" and all the 529 plan cares about is reporting your withdrawal to the IRS.

If you exceed $10,000 per child, or don't actually have qualified tuition expenses, you will pay tax penalties to the IRS.

Your Fidelity (or other provider) 529 plan does not have to be the state you're from. The plans don't care. That being said, this post has NOTHING to do with state tax deductions or other benefits for 529 plans. There are myriad provisions that have to be met to take state tax benefits from using 529 plans, mainly that the 529 plan has to be the state you're from and distributions be used towards higher education.

Let me stress that again: This whole post has NOTHING to do with state tax deductions, benefits, or bonuses for 529 plans.

If you're trying to hit spending thresholds for credit card bonuses, or even have a 5% cash back category, this is a pretty lucrative deal. Especially if you live/work right near a Toys R Us, as you only pay 1.2% fee for purchases.

Offline Geshmak25

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #1 on: February 13, 2018, 09:27:25 AM »
Isn't it $10K per family, not per child?
PUTPAC = PITA

Offline ShlockDoc

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #2 on: February 13, 2018, 09:48:33 AM »
Oh well. RIP GoC.

Offline davidrotts63

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I'll tell you later

Offline terpy

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #4 on: February 13, 2018, 09:55:08 AM »
Isn't it $10K per family, not per child?
No, it's per child. Here's the actual text from the law:
"The amount of cash distributions from all qualified tuition programs described in subsection (b)(1)(A)(ii) with respect to a beneficiary during any taxable year shall, in the aggregate, include not more than $10,000 in expenses described in subsection (c)(7) incurred during the taxable year."

Beneficiary is per child, not per family.

Offline moe8555

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #5 on: February 13, 2018, 10:48:26 AM »
My understanding was that you could also contribute and withdraw without penalty on the principal, even without education expenses?

Offline noturbizniss

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READ THE DARN WIKI!!!!

Chuck Norris...
...can still do FT method
...READS THE WIKI!!!

Offline ChaimMoskowitz

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #7 on: February 13, 2018, 07:49:04 PM »
DDMS?
I just found a new supply of forks!

Offline davidrotts63

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I'll tell you later

Offline rileywiles23

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #9 on: February 13, 2018, 08:52:16 PM »
Oh well. RIP GoC.
This ain't a big secret that is being spilled here. Been blogged about ad nausea since it's been around.
Life is as good as you make it...

Offline ChaimMoskowitz

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #10 on: February 13, 2018, 08:59:52 PM »
This ain't a big secret that is being spilled here. Been blogged about ad nausea since it's been around.
...but who still allows direct funding with a CC?
I just found a new supply of forks!

Offline mmgfarb

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #11 on: February 13, 2018, 11:03:42 PM »
...but who still allows direct funding with a CC?
That's the real secret....
"JS [is] a fetid cesspool of unvarnished linguistic manure, with lots of useless drivel and post-padding." -Moishebatchy

Offline davidrotts63

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #12 on: February 13, 2018, 11:04:24 PM »
That's the real secret....
We all know UPS..... But how is the secret
I'll tell you later

Offline ChaimMoskowitz

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #13 on: February 13, 2018, 11:06:35 PM »
That's the real secret....
If you know any left please spill the beans. I will give it a week tops!!!
I just found a new supply of forks!

Offline davidrotts63

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Re: Easy Credit Card spend for those of us with tuition - Giftofcollege.com
« Reply #14 on: February 13, 2018, 11:07:12 PM »
If you know any left please spill the beans. I will give it a week tops!!!
Or don't post it on a public forum.
I'll tell you later