FAQ’s

You’ve got questions, we’ve got answers

Frequently Asked Questions from ADVISORS

Do I need a sales agreement? How do I set one up?

To be able to sell Scholars Choice, you will need to have an up to date selling agreement completed and approved by Legg Mason. Depending on how your practice is set up will determine the selling agreement which is right for your organization. Please contact scholarschoice@leggmason.com and ask to be set up as a new advisor.

How do I get paid?

Scholars Choice is the only advisor-sold 529 plan within CollegeInvest to offer a compensation plan. Depending on your practice, please consult the PDS and applicable class share structures for compensation plan information.

No compensation will be paid through the Direct Portfolio, Smart Choice or Stable Value Plus plans.

How can I access my clients account information?

Depending on the plan your client participates in you have a couple of different options. For Direct Portfolio accounts, you will need to make sure you have client viewing privileges and can find the authorization form.

DST VISION to view SCHOLARS CHOICE accounts
» Sign-up or login

529 Quickview to view DIRECT PORTFOLIO accounts
» Sign-up or login

How do I order materials?

To order SCHOLARS CHOICE materials -
» Log onto www.myleggmason.com and order the materials that are right for you.

Materials can also be viewed as a PDF file and printed immediately at www.scholars-choice.com under the forms page.

To order DIRECT PORTFOLIO enrollment materials -
» Visit Upromise.com

Frequently Asked Questions from Your CLIENTS

They have questions, now you have the answers!

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 college 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.¹

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.^²

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 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 (unqualified) withdrawals may be subject to federal and state taxes, as well as penalties.

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.

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 the CollegeInvest balance limit, which is $280,000 per student.³

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 any eligible public and private college or university, trade school, or vocational school 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 eligible 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^⁴ or leave the funds in the account for use for other eligible 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 typically 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.

Contributions

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. There are no minimum initial or subsequent contribution amounts for Smart Choice.

How much can I contribute?

Contributions to an account for a beneficiary, together with all other gifts to the beneficiary, less than $14,000 ($28,000 per married couple) in a single year are not subject to the federal gift tax or the generation-skipping transfer tax.⁵

Contributions between $14,000–$70,000 ($28,000–$140,000 for couples filing jointly) made in a single year can be prorated over a five-year period without incurring gift taxes or reducing your unified estate and gift tax credit.

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 consult your tax advisor regarding your individual situation.

Is there a limit to the total amount held in an account?

The aggregate account balance of all 529 savings accounts sponsored by the State of Colorado for an individual beneficiary cannot exceed $350,000. If the aggregate balance reaches this limit, additional contributions to the beneficiary account(s) will not be accepted. Subsequent earnings to the account(s) can exceed this limit.⁶

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.

» Get a list of eligible institutions

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 years’ 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.

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.

How can we contact you for more information?

¹Contributions to the Plan(s) are deductible from Colorado state income tax in the tax year of the contribution , up to your Colorado taxable income for that year. Such deductions are subject to recapture in subsequent years in which non-qualified withdrawals are made.
² 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.

³ The combined maximum account balance limit for all 529 plans established and maintained by the State of Colorado for a particular beneficiary cannot exceed $350,000. Although account balances can grow beyond that amount, no additional contributions can be made once the balance reaches $350,000.
⁴ Restrictions apply. Please see the Plan Disclosure Statements.

⁵ Contributions between $14,000 and $70,000 made in one year can be prorated over a five-year period without incurring federal gift taxes or reducing your unified estate and gift tax credit. If the account owner dies before the end of the five-year period, a prorated portion of the contribution will be included in his or her taxable estate. If you contribute less than the $70,000 maximum, additional contributions can be made without incurring federal gift taxes, up to a prorated level of $14,000 per year. Federal 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.

⁶ The combined maximum account balance limit for all 529 plans established and maintained by the State of Colorado for a particular beneficiary cannot exceed $350,000. Although account balances can grow beyond that amount, no additional contributions can be made once the balance reaches $350,000.

Important Considerations

To learn about CollegeInvest’s 529 program, its objectives, risks, charges, expenses, limitations, restrictions and qualifications regarding the Plans’ benefits and potential tax advantages, please read and consider carefully the Program Disclosure Statements (PDS) available at www.collegeinvest.org before investing. Also, check with your or your beneficiary’s home state to learn if it offers tax or other benefits for investing in its own plan. Administered and issued by CollegeInvest.

Investments are not guaranteed by CollegeInvest, the State of Colorado, its agencies, The Vanguard Group, Inc., Upromise Investments, Inc., Legg Mason Global Asset Allocation, LLC, or FirstBank, and may lose value, including principal amount invested. The guarantee of Stable Value Plus College Savings Plans is the obligation of MetLife and only to the extent of the Funding Agreement. Smart Choice College Savings Plans are not insured by CollegeInvest, the State of Colorado, or its agencies. However, these funds are FDIC-insured in accordance with the current FDIC coverage limits.

CollegeInvest is the issuer of plan securities and is the trustee of the plans in accordance with Colorado law. CollegeInvest also oversees the Managers' activities and provides certain administrative services, such as marketing, audit, and financial statements, in connection with the plans.

Upromise Investments, Inc. serves as Plan Manager for the CollegeInvest Direct Portfolio College Savings Plan and has overall responsibility for the day-to-day operations, including effecting transactions. The Vanguard Group, Inc. also serves as Plan Manager and Investment Manager for the CollegeInvest Direct Portfolio College Savings Plan, and Vanguard Marketing Corporation, an affiliate of The Vanguard Group, Inc., assists CollegeInvest with marketing and distributing the Direct Portfolio Plan. The Direct Portfolio Plan’s portfolios, although they invest in Vanguard mutual funds , are not mutual funds and you could lose money by investing in the plan. Vanguard Marketing Corporation, Distributor and Underwriter.

Legg Mason Global Asset Allocation, LLC, Investment Manager for the CollegeInvest Scholars Choice College Savings Program. Legg Mason Investor Services, LLC is the primary distributor of interest in the Program; together they serve as Manager of the Program.

FirstBank serves as the Plan Manager for the CollegeInvest Smart Choice College Savings Plan and has overall responsibility for the day-to-day operations, including effecting transactions. FirstBank also assists CollegeInvest with marketing and distributing the CollegeInvest Smart Choice College Savings Plan. FirstBank - Member FDIC.

The MetLife Insurance Company serves as the Investment Manager for the CollegeInvest Stable Value Plus College Savings Plan. CollegeInvest has overall responsibility for the day-to-day operations, including effecting transactions.

CollegeInvest and the CollegeInvest logo are registered trademarks of CollegeInvest. CollegeInvest Direct Portfolio College Savings Plan, Scholars Choice, CollegeInvest Smart Choice College Savings Plan, and CollegeInvest Stable Value Plus College Savings Plan are registered service marks of CollegeInvest. Vanguard is a trademark of The Vanguard Group, Inc. Upromise is a registered service mark of Upromise, Inc.