Every Question Deserves an Answer

Opening a 529 savings plan is a big step—we’re sure you have lots of questions. Many of the most common questions are answered here. In choosing the plan that best suits you, we encourage you to read the Plan Disclosure Statements. They explain certain risks, limitations, restrictions and qualifications regarding the Plan’s benefits and potential tax advantages. If you need more in-depth information, or you can’t find the information you need, please contact us or consult your financial advisor. We are happy to help you.

» General Information
» Beneficiary Information
» Account Information
» Making Withdrawals

Important Considerations

Official Statement
Please read the applicable Plan Disclosure Statements carefully before investing. They explain certain risks, fees, limitations, restrictions and qualifications regarding the Plan’s benefits and potential tax advantages. Plan Disclosure Statements can be found at www.collegeinvest.org. Investments in CollegeInvest Plans are not guaranteed by the state of Colorado or any other governmental entity, and may lose value, including principal amount invested. Administered and issued by CollegeInvest.

Home State
If you or your designated beneficiary are a resident of a state other than Colorado, before investing you should check with your home state to see if it offers a 529 program. That program may offer state tax or other benefits to residents of that state that may not be available to investors in programs of other states.

General information

 What is a 529 savings plan?
529 plans are state-sponsored college savings plans established by the federal government in Section 529 of the Internal Revenue Service Code. Set up to help families save more for college, these plans have some great benefits—including a combination of important tax advantages—that other savings vehicles may not offer.

 What are the benefits of investing with CollegeInvest?
If you are a Colorado resident, every dollar you contribute to your account can be deducted from your Colorado State taxable income. Only CollegeInvest can offer you that. Your account will grow federal and Colorado State tax-free for the duration of your investment. If you use your account for qualified expenses, earnings are also exempt from federal and Colorado State taxes. Finally, to meet the diverse needs of the many families we serve, CollegeInvest offers a wide range of investment options.

 Who can participate?
Anyone can open an account and anyone can be a beneficiary. Parents, grandparents, other relatives or friends can save through a CollegeInvest account. You may even open an account for yourself. There are no age limits on who may invest money or who may benefit from the funds.

 What if I don’t live in Colorado?
We’re open to residents of every state. However, if you are not a Colorado resident and don’t file a Colorado State tax return, you won’t be eligible for a state income tax deduction. Also, for some CollegeInvest plans, there are certain account maintenance fees if you are not a resident of Colorado or Wyoming. We always recommend checking to see if your state offers a 529 college savings plan that offers special tax advantages for that state's residents.

 When can I open a CollegeInvest savings plan?
You can open an account at any time. It is never too soon to start saving.

 When is it too late to open an account?
It’s never too late to open a 529 savings plan. Even if your child is in high school, you can benefit from a CollegeInvest account.

 What higher education expenses are covered by the plan?
You can use your savings to pay for qualified expenses such as tuition, fees, certain room and board expenses, books and supplies required for attendance. Other withdrawals may be subject to federal and state taxes, as well as penalties.

Important Considerations

Non-qualified withdrawals
The earnings portion of a non-qualified withdrawal is subject to federal income taxes and any applicable state income tax, as well as an additional 10% federal penalty tax.

State income tax deduction
Contributions to the Programs in a tax year are deductible from Colorado State income tax up to the extent they are included in your federally taxable income for that year, subject to recapture in subsequent years in which non-qualified withdrawals are made.

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Beneficiary information

 Can there be more than one account for the same student?
Yes. In fact, we often find that both a parent and grandparent may open an account for a student. However the aggregate balance of all accounts for a single student may not exceed CollegeInvest's balance limit, which is $280,000 per student.

 Can I designate more than one student as a beneficiary of a single account?
No. Only one student may be the beneficiary of a single account.

 Is my student required to attend a Colorado college?
No. You may use your funds at public and private colleges, universities, and vocational schools across the country.

 What if my student doesn’t go to college?
If your student decides not to attend college, you can name another beneficiary (certain restrictions apply; please see PDS for complete information), or you can choose to leave the funds in the account for a time when he or she might decide to attend college. If you need your savings for another purpose, you can withdraw the funds; however, there are tax consequences for non-qualified withdrawals.

 What if my student gets a scholarship?
If your student is awarded a scholarship, you may withdraw funds from your account equal to the amount of the scholarship, without the additional 10% federal penalty tax. The earnings portion of the amount you withdraw is subject to federal and state income taxes at the rate of the person receiving the withdrawal. However, many scholarships do not cover items like room and board, books and other required supplies. You can use your funds to pay for these expenses. Alternatively, you could transfer the account to another beneficiary or leave the funds in the account for use for other higher education expenses.

 Will my account affect my student’s eligibility for financial aid?
Any assets you or your student own impact your student’s eligibility for financial aid. However, 529 savings plans do have some benefits over other ways you might use to save for college. Unlike some other savings vehicles, they are viewed as a parental asset, not a student asset. Thus, funds in a 529 account are weighed less heavily in the formula used by colleges to determine financial need.

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Account information

 How do I open an account?
Once you have determined which plan best suits your needs and carefully read the Plan Disclosure Statements, simply fill out an application and send in a check. If you chose either the Direct Portfolio or Stable Value Plus plans, you may enroll online for Direct Portfolio or Stable Value Plus or download or request an enrollment kit. If you are working with a financial advisor and have chosen the Scholars Choice Program, your financial advisor will work with you to open an account.

 How do I contribute to my account?
Simply send a check or money order, make a one-time transfer from your checking or savings account, make periodic automatic transfers or set up automatic transfers—they’re free.¹

 Are there minimum contribution requirements?
You need a minimum of $25 to open a Direct Portfolio or Stable Value Plus account, or a minimum of $250 to open a Scholars Choice account. After that, subsequent minimum contributions are $15 for Direct Portfolio, $25 for Stable Value Plus, and $50 for Scholars Choice. 

 Is there a limit on how often or how much I may invest in the account?
You may invest as often or as seldom as you like. Federal laws require that limits be placed on the amount that can be contributed to 529 college savings accounts on behalf of a single beneficiary. CollegeInvest's maximum contribution limit is currently $280,000 for all accounts administered by CollegeInvest for the same beneficiary; however, your account can continue to grow beyond this point. Once this limit is reached, you will be unable to make additional contributions to the account. However, if your aggregate balance for all accounts for a single student falls below that amount, you may resume making contributions. This limit may periodically increase to reflect increases in higher education costs. Once the balance limit is reached, additional investments to your account will not be accepted or will be returned.

 Can I change my investment option for my account?
Yes. You may periodically adjust your asset allocation to fit your needs as they change over time. Federal regulations allow you to change your options for existing funds in an account within the same 529 plan once per calendar year and to transfer between 529 programs (i.e., from another state's 529 plan to a CollegeInvest 529 plan) for the same beneficiary once per 12-month period. You may change your allocations for future contributions at any time.  For 2009 only, the IRS has announced that 529 plans will be able to accept two investment change requests per 529 account during calendar year 2009.  Again, this is only for calendar year 2009.

 What are the fees associated with the account?
There are certain fees and expenses associated with your account. Please read the Plan Disclosure Statements for the plan you are considering.

 How will I know my account balance?
All CollegeInvest plans have online account access. Visit the My Account section of our website to check your balance at any time. In addition, you will receive statements for each plan in which you invest.

 What happens if I move to another state?
You do not have to be a Colorado resident to invest with CollegeInvest—anyone can participate. However, if you do not pay Colorado State income taxes, you will not be able to deduct your contributions from your taxable income.

 If I consult a financial advisor, what relationship, if any, does that advisor have with CollegeInvest?
Your financial advisor may or may not have a relationship with CollegeInvest. Visit the participating financial institutions section of the site for a list of financial institutions that have agreements to offer CollegeInvest's Scholars Choice College Savings Program. Keep in mind financial advisors may not have an agreement and still advise their clients to save for college through CollegeInvest's Direct Portfolio or Stable Value Plus college savings plans.

Important Considerations

¹ A periodic investment plan does not ensure a profit or protect against loss in declining markets.

Gift tax
Contributions between $13,000–$65,000 ($26,000–$130,000 for couples filing jointly) made in one year can be prorated over a five-year period without incurring gift taxes or reducing your unified estate and gift tax credit. If you contribute less than the $65,000 maximum ($130,000 for couples filing jointly), additional contributions can be made without incurring gift taxes, up to a prorated level of $13,000 per year ($26,000 for couples filing jointly). Gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a given student in the year of contribution. Please consut your tax advisor regarding your individual situation.

A periodic investment plan does not ensure a profit or protect against a loss in declining markets.

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Making withdrawals

 How can account assets be used?
In general, assets may be used to pay for qualified higher education expenses, including tuition, certain room and board expenses, books, fees, supplies required for attendance and equipment, at any eligible higher education institution.

 What are “eligible institutions of higher education”?
Most schools nationwide are eligible, including community colleges, public and private four-year colleges and universities, graduate and post-graduate programs and certain proprietary and vocational schools. To be an "eligible institution of higher education" for 529 College Savings Plan purposes, an institution must be eligible to participate in certain U.S. Department of Education student financial aid programs.

 Can account assets be used for part-time students?
Yes. A student's qualified higher education expenses—other than room and board, where certain restrictions apply—may be paid with account assets, even if the student attends school less than half time. A student must attend at least half time for any portion of his or her room and board expenses to be qualified higher education expenses.

 What if I need to make a withdrawal for something other than college?
When making a non-qualified withdrawal, the earnings portion of the withdrawal is subject to federal income taxes and any applicable state income tax (including recapture of prior year's tax deduction), as well as an additional 10% federal penalty tax. Qualified withdrawals include certain room and board expenses, tuition, books, fees, required supplies and equipment.

 How do I make a qualified withdrawal?
To make a qualified withdrawal, complete a Withdrawal Request Form instructing the manager to send the money to you, to the student or to the student's institution of higher education. You should retain proper documentation showing that your withdrawal was used to pay qualified expenses. You can find the Withdrawal Request Form online under the My Savings Account Login section.

 When may I take money out of my account?
You can withdraw money at any time after payment has been collected and the money is fully invested.

 Will I have to pay taxes on withdrawals from my account?
Assets used to pay qualified higher education expenses are free from federal and Colorado state income tax.

 If I do not have a Direct Portfolio account linked to my Upromise Rewards account, can I make a withdrawal from my Upromise Rewards account?
Yes, you can. You will need to submit a witdrawal request form to Upromise Rewards and they will process your withdrawal and send you a check. Please follow the directions for Withdrawing Funds from a Upromise Rewards Account.

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