By Christian Dekker, CFP® 

Graduation season is a time of hope and promise, but it can also bring a lot of uncertainty. Graduates are stepping into a new chapter filled with big financial decisions, and parents and grandparents often want to help—but aren’t always sure what kind of support will make the biggest difference. Whether it’s paying for education, offering financial gifts, or helping build smart money habits, the goal is often the same: giving the next generation the strongest possible start.

For many of our clients, the first impulse is to give money to their high school and college graduates. But many times, creating a financial launchpad can pave a clearer path forward instead of just handing over a check.

If you want to give your new graduate a meaningful head start, consider taking one or more of these steps this graduation season.

Smart Ways to Fund Education

Education can be expensive, but when you take the right approach to funding, you may be able to offer support this graduation season.

For example, many parents have a 529 savings plan for their graduates. These plans are some of the most powerful education funding tools available and come with several major advantages, including:

• Contributions can grow tax-free.
• Qualified withdrawals are tax-free.
• Married couples may superfund up to $190,000 in one year by rolling five years of contributions into one.

If your graduate’s 529 plan still has funds remaining, you can use that money to give them a head start on retirement planning. 

Under the SECURE Act 2.0, you can make a penalty-free rollover from a 529 plan to a Roth IRA for the 529 plan beneficiary, as long as the account is at least 15 years old and has had the funds in it for at least five years. The lifetime rollover limit is $35,000. 

Additionally, if you’re able to directly fund tuition, any direct payments you make to an educational institution aren’t subject to gift tax.

If your student ends up receiving scholarships or changing course, this option can change the math in a big way.

Gifting With Intention, Not Just Generosity

To help increase the impact of your gift, it’s important to give with intention as well. The right gifting strategy can help you offer considerable graduation-season support while limiting tax liability.

For instance, the annual gift tax exclusion amount for 2026 is $19,000, or $38,000 per couple. Making multiple gifts over the years can help reduce your taxable estate without touching the lifetime exemption.

Before you start giving, remember that as of 2026, the lifetime gift and estate tax exemption sits at $15 million. However, that number is tied to tax legislation that may expire. If you want your graduation season gifts to consist of purposeful wealth transfer, keep this window in mind.

Another way to keep tax liability low is to gift appreciated stock instead of cash. That way, you can avoid a capital gains tax hit.

Teaching Financial Literacy: The Gift That Lasts

Direct financial gifts are helpful, but this graduation season, you might think about teaching younger loved ones about financial literacy. A few key points to consider passing down:

• The importance of capturing the full employer 401(k) match.
• The benefits of Roth retirement accounts in early career years.
• Sequencing matters, so creating an emergency fund and then investing can ensure earmarked funds are available, even in volatile markets.
• Keeping 3 to 6 months of expenses in a high-yield savings account can prevent having to sell investments at a bad time.
• Compound interest is powerful, especially when you start saving early.

Learning about money is a lifelong endeavor, and graduation season is a good time to start building a foundation that lasts for your graduate.

Looking for Financial Guidance This Graduation Season?

Graduation season gives you an opportunity to make a difference in a loved one’s life. If you’re not sure how to best support your new graduate, we’re here to help. At Thrive Wealth Management, LLC, we believe that your money is just one facet of your life. That’s why we strive to help you align your finances with meaningful life goals.

If you want to know more about us and how we work, contact us online today. To schedule a meeting, call (215) 376-5530 or email christian@thrivewealth.com.

Frequently Asked Questions

What is the best financial gift to give during graduation season?

The best financial gift during graduation season depends on the graduate’s needs and long-term goals. While cash can be helpful, many families find that contributing to education costs, helping fund a Roth IRA, or supporting an emergency savings account creates a stronger financial foundation. Thoughtful gifts that encourage long-term stability often have a greater impact than a one-time check.

Can leftover 529 plan funds be used for retirement savings?

Yes, in some cases leftover 529 plan funds can be rolled into a Roth IRA for the beneficiary. Under SECURE Act 2.0, if the 529 account has been open for at least 15 years and the funds have been in the account for at least five years, up to a lifetime limit of $35,000 can be transferred penalty-free. At Thrive Wealth Management, our team helps families evaluate whether this strategy makes sense as part of graduation season planning.

How can parents and grandparents help graduates build financial literacy?

One of the most valuable gifts during graduation season is helping graduates understand how money works. Teaching them about budgeting, emergency funds, employer 401(k) matches, Roth accounts, and compound interest can create lifelong financial confidence. At Thrive Wealth Management, we often remind families that financial education can be just as powerful as financial support.

About Christian

Christian Dekker, CFP®, is a Relationship Manager and fiduciary at Thrive Wealth Management, where he provides personalized, comprehensive planning to support clients in pursuing major milestones and remaining disciplined toward their long-term goals. Based in Philadelphia, Christian is an avid runner and Eagles fan who honors his grandfather’s team legacy while enjoying life with his girlfriend and three dogs.

Disclosure:

This material is provided for informational and educational purposes only, should not be viewed as an exhaustive discussion of the topics presented, and should not be construed as individualized advice for any reader’s personal circumstances. For guidance on how these matters may impact your financial plan or investment portfolio, please contact your Thrive Wealth Management, LLC representative. While the information presented is believed to be factual and up to date, Thrive Wealth Management, LLC does not guarantee its accuracy and, due to various factors, including but not limited to changing laws and regulations, this information is subject to change. All expressions of opinion reflect the judgment of the authors as of the date of publication.  Thrive Wealth Management, LLC is not a law firm or an accounting firm, and no content contained herein should be construed as legal or accounting advice. Please consult with the qualified professional(s) of your choosing for legal and accounting advice.

Please visit https://thrivewealth.com/disclosure for additional information regarding the professional designations and credentials discussed. Professional designations and credentials do not guarantee success or any particular investment or financial outcome.

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