529 Plans
Important information about revenue sharing arrangements
Description
A 529 plan is a college savings plan that allows individuals to save and invest on a tax-advantaged basis in order to fund future college and graduate school expenses for a child or other beneficiary.
Objective
To provide an account that individuals can use to save for qualified higher education expenses.
Selecting a 529 Plan
Anyone who wants to set aside dollars for higher education expenses should consider a 529 plan. In choosing among 529 plans, one should consider that certain states offer tax incentives to in-state residents who invest in their home state's 529 plan. Whether a state tax incentive is available depends on your state of residence. For tax advice, consult with your tax professional. For information concerning 529 plans, including information comparing the performance of different state 529 plans, please contact your local financial advisor.
Product Features
- Contribution - A 529 plan may allow for contributions over $300,000, depending on the plan. However, contributions are gifts; therefore, the $13,000 annual gift limit should be considered. In addition, a special gifting provision applies to 529 plans; $65,000* can be contributed in one year to be prorated over five years, until the maximum contribution limit of the plan is reached. Tax forms are required for accelerated gifting, please contact your tax professional.
- Eligibility - Anyone who plans to attend an eligible postsecondary educational institution can be the beneficiary of a 529 plan. The account holder maintains control of the account. If the beneficiary decides not to attend a postsecondary school, the account owner may change beneficiaries to another member of the family (first cousins included; if the new beneficiary is not related to the previous beneficiary, taxes may apply) of the original beneficiary.
- Distributions - Qualified distributions can be taken without federal income tax or penalty for any of the following: tuition, fees, books, supplies, room and board, plus for 2009 and 2010, computers and equipment, technology and internet access. Withdrawals used for expenses other than qualified education expenditures may be subject to federal and state taxes plus a 10 percent penalty.
* If an account owner elects to treat a contribution as having been made over a five-year period and dies before the end of the five-year period, the portion of the contribution allocable to the remaining years in the five-year period (not including the year in which the account owner died) would be included in computing the account owner's gross estate for federal estate tax purposes. Account owners may be required to file a gift tax return in each of the five years. In addition, account owners may wish to consult their tax or estate-planning counsel to ensure that they obtain the tax consequences they desire.
529 Plans Available through Edward Jones
- AIM College Savings Plan (NE)
- Alliance Bernstein CollegeBound (RI)
- American Century Learning Quest 529 (KS)
- American Funds CollegeAmerica (VA)
- Calvert Funds 529 College Savings Plan (DC)
- Columbia Funds Future Scholar 529 College Savings Plan (SC)
- Columbia Funds New York's 529 College Savings Program Advisor Plan (NY)
- Fidelity Advisors 529 Plan (NH)
- Fidelity ScholarShare Advisor College Savings Program (CA)
- Franklin Templeton 529 College Savings Plan (NJ)
- Hartford SMART529 (WV)
- John Hancock Freedom 529 (AK)
- Upromise CollegeChoice Advisor 529 (IN)
- Legg Mason Scholars Choice 529 Plan (CO)
- MFS 529 Savings Plan (OR)
- Oppenheimer Funds 529 (OR)
- Oppenheimer Scholar's Edge (NM)
- Putnam CollegeAdvantage (OH)
- Union Bank and Trust Bright Directions College Savings Program (IL)
- Union Bank and Trust College Savings Plan (NE)
- Upromise Advisor 529 Plan (IA)
- Upromise MOST Advisor College Savings Plan (MO)
- VanKampen Higher Education 529 Plan (AL)
- Wells Fargo EdVest (WI)
Investors should consider, prior to investing, whether their resident state or the resident state of the beneficiary offers any state tax or other benefits that are only available in that state's qualified tuition program.
