• 1. What is a 529 Plan?

    529 plans are tax-advantaged programs that help families save for college. They are named for Section 529 of the Internal Revenue Code where they are created. There are no income or age limits for account owners. You can even open an account for yourself. 529 plans are considered a flexible option for families to plan and save for college.

    Two types of 529 plans:

    529 college savings plans - The 529 college savings plan are similar to a Roth IRA. Contributions are after-tax, but the increase in value is tax deferred and tax-free when used to pay for Qualified Higher Education Expenses including tuition, books, and room and board at an accredited college. These plans are called "savings" plans but are generally investment accounts. You are required to choose an investment option offered by the plan. Most investment options include a mix of fixed assets and securities. A popular investment option offered by most plans is age-based where the asset allocation changes over time becoming more conservative as the beneficiary nears college age. Some 529 savings plans are sold directly to families by the plan or are sold by financial advisors.

    529 prepaid college tuition plans - State sponsored prepaid plans allow you to prepay all or part of the tuition and mandatory fees, primarily, of in-state public institutions based on today's tuition rates. Some of these plans charge a premium and/or annual account maintenance fees. Private College 529 Plan is the only prepaid plan that is NOT state-sponsored. Tuition purchased from the Plan can be used at any of the nearly 300 participating private colleges and universities throughout the country. Assets can be rolled over or refunded to pay for expenses other than tuition and mandatory fees (like room and board) or to pay for Qualified Higher Education Expenses at a school that does not participate in the plan.

  • 2. How do 529 plans vary?

    529 plans vary in a number of ways, including fees that are charged for investments, account maintenance or management, contribution limits to the account, in-state tax treatments such as a state tax deduction, investment options and plan manager. There may be other differences, such as special programs or benefits defined by the particular plan.

    Before opening a 529 plan account, look at your home state's plan first and consider the value of any state tax deductions or credits for contributions to a plan sponsored by your state of residence.

    Easily compare features of 529 plans and other savings vehicles.

  • 3. What happens if an account owner or beneficiary dies before a certificate is redeemed?

    When opening an account, you must designate a beneficiary and appoint a successor owner. A successor owner assumes ownership of the account with all the rights of the original account owner, if the original account owner dies.

    In the event of a beneficiary's death, the account owner has two options:

    • Designate a family member of the deceased beneficiary as the new beneficiary
    • Request a refund*

    In the case of a refund request, a one-year (12 calendar months) holding period for refunds is waived.

If you take a refund rather than redeem your tuition certificates for their intended purpose, the refund will be adjusted based on the net performance of the Program Trust, subject to a maximum increase of 2% per year, and a maximum loss of 2% per year. If your refund amount is not used to pay for qualified higher education expenses, the earnings portion of that amount will be subject to U.S. federal income tax and a 10% additional tax. See Disclosure Statement for details. The refund amount will be paid from the Program Trust only.

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