General Questions (A Great Place to Start)

What is a 529 savings plan?

529 college savings programs are state-sponsored plans established to help families save money specifically for college expenses. And with a variety of tax benefits, experts agree they’re one of the best ways to save.

Read on to learn more about what makes 529s such a great savings option.

General Information

Who can participate?

Grandparents like yourself, parents, other relatives, even friends!

In fact, you may even open an account for yourself. Many grandparents open their own CollegeInvest college savings account to save for classes in art, music, cooking or other subjects they’ve always had an interest in at eligible schools and institutions across the country. Even internationally.

Learn more about lifestyle learning.

What if I don’t live in Colorado?

Then you’re missing out on 340 days of sunshine and some great outdoor activities!

CollegeInvest savings plan are open to residents of every state. However, if you’re not a Colorado resident or you don’t file a Colorado state tax return, you won’t be eligible for a Colorado state income tax deduction.¹

If you are not a resident of Colorado or Wyoming, you may be subject to additional fees. We recommend checking to see if your or your beneficiary’s state offers a 529 college savings plan that offers special tax advantages.

When can I first open a CollegeInvest savings plan? When is it to late?

It is never too soon to start saving. Whether your grandchild is in diapers or high school, he or she can benefit from a CollegeInvest account.

What expenses are covered by the plan?

Tuition
Required fees
Certain room and board expenses
Required books
Required supplies

What are the benefits of investing with CollegeInvest?

CollegeInvest savings plans allow Colorado residents to deduct every dollar you contribute to your account from your Colorado state income taxes.¹
Earnings on your account can grow federal and Colorado state tax-free.²
Withdrawals for qualified higher education expenses are also exempt from federal and Colorado state taxes.²
CollegeInvest offers a wide range of investment options to meet your needs regardless of your saving and investment preferences, including Colorado’s only FDIC-Insured 529 savings plan.³
And, your savings can be used for qualified higher education expenses at any eligible college, university, trade or vocational school in the country. Even internationally.

Beneficiary Information

So, what exactly is a beneficiary?

A beneficiary is a person, of your choosing, who is entitled to the benefits of the savings in your CollegeInvest savings account. It can be your son or daughter, a grandchild, a favorite niece or nephew – or, even yourself! In fact many grandparents or retirees use funds to take classes in things that have always interested them!

Can more than one grandchild be the beneficiary of a single account?

No. Only one student may be the beneficiary of a single account.

Can parents and grandparents open separate accounts for the same student?

Yes, in fact this is quite common.

Is my grandchild required to go to college in Colorado?

No. They may use your funds at any eligible public and private college, university, trade or vocational school across the country.

What if my student doesn’t go to college?

You can change the beneficiary to another family member , or even yourself.^³
You can leave the funds in the account for when he/she might attend college later.
Or, you can withdraw the funds, subject to tax consequences for non-qualified withdrawals .^⁴

What if my grandchild gets a scholarship?

You can use your funds to cover eligible items like room and board, books and other supplies that some scholarships don’t cover.
You can change the beneficiary to another family member, or even yourself.^⁴
Simply leave the funds in the account for use for other eligible higher education expenses at a later time.
Or, you may withdraw funds from your account equal to the scholarship amount, without incurring the 10 percent federal penalty on the earnings portion. The earnings portion (but not contribution amounts) of your withdrawal is subject to state and federal income tax.

Note, there may be different tax consequences for various account changes and/or withdrawals. You should carefully read the Plan’s Plan Disclosure Statement, or consult a tax advisor for your specific situation.

Will my account affect my grandchild’s financial aid eligibility?

While any assets you or your grandchild own will impact financial aid, 529 savings plans have some benefits over other savings accounts.

529s are generally viewed as a parental asset, and not a student asset. So the funds in a 529 account are weighed less heavily in the formula used by colleges to determine financial need.

Account Information

How do I open an account?

Once you have read the Plan Disclosure Statements and chosen your plan, simply fill out an application and send in a check:

Direct Portfolio College Savings Plan

Enroll online

Download an enrollment kit

Request an enrollment kit

Scholars Choice College Savings Program^SM

Your financial advisor will work with you to open an account. If you don’t have a financial advisor but would like to find one, click here.

Smart Choice College Savings Plan^SM

Enroll online at www.efirstbank.com

Open an account by phone at 303-238-9000

Visit the nearest FirstBank location

Stable Value Plus College Savings Plan^SM

Request an enrollment kit

How do I contribute to my account?

How can’t you is more like it. Generally, you may contribute by:

Sending in a check
Sending in a money order
Making a one-time transfer from your checking account
Making a one-time transfer from your savings account
Making periodic automatic transfers
Setting up automatic transfers (it’s easy!!)

Are there minimum contribution requirements?

Minimum to open:

Direct Portfolio : $25 ($15 if contributing by payroll direct deposit)
Scholars Choice: $250
Smart Choice: No minimums
Stable Value Plus: $25

Minimum contributions:

Direct Portfolio: $15
Scholars Choice: $25
Smart Choice: No minimums
Stable Value Plus: $25

Can I change my investment options?

The IRS regulates the ability for you to change your account’s asset allocation to fit your changing needs.

Here are the current guidelines:

Existing Assets: You may change your investment option for all or a portion of your existing assets for any reason, one time during any calendar year, without incurring tax consequences or penalties.

For example: You currently have $5,000 in a “conservative fund option” but want to move the money to an “aggressive fund option”. You’re allowed to change your investment option (called a re-allocation) once per calendar year.

This limitation applies on an aggregate basis to all of your accounts for the same beneficiary within a single plan, and across accounts you may have for this same beneficiary in additional CollegeInvest plans.

You may, however, change the options for more than one account (for the same beneficiary) if all such changes are made simultaneously (at the same time). All simultaneous changes are treated as a single change, and not subject to tax consequences or penalties.
Account Transfers: You can transfer from one 529 plan to another (thereby changing investment options) for the same beneficiary one time per twelve-month period. (Check with your Plan for any restrictions on moving accounts within a Plan.)
Change in Beneficiary: You may also make a re-allocation anytime you change beneficiaries. (Subject to limitations regarding changing a beneficiary. Carefully review your Plan Disclosure Statement.)
Future Contributions: Allocations for future contributions can be changed at any time.

For example: You currently have $3,000 in an “aggressive fund option”, and you would now like to contribute $100 from your paychecks for the next few months. You want the “new” contributions to be allocated into a “conservative fund option”.

You’re allowed to make this change with the new $100 going into your account since it’s a future contribution. However, your existing $3,000 will stay in the aggressive fund option if you have made any changes to that allocation within the current calendar year.

Note, each situation is unique and you should carefully review the Plan Disclosure Statement to understand limitations and the potential tax consequences. Or consult with your tax advisor for your specific situation.

Will I get hit with a bunch of fees?

There are specific fees and expenses associated with your account. Please read the Plan Disclosure Statement for the plan you are considering.

Can I check my account balance online?

Of course! All CollegeInvest plans have online account access and you can visit the LOGIN section of our website to check your balance at any time.

What happens if we move out of Colorado?

You do not have to be a Colorado resident to save with CollegeInvest - anyone anywhere can participate. However, if you are not a Colorado resident or do not pay Colorado state income taxes, you will not be able to deduct your contributions.⁵

Withdrawal Information

How can account savings be used?

Savings can be used for a variety of eligible college-related expenses, including:

Tuition
Fees
Certain room and board expenses
Required books
Required supplies

What schools are eligible?

Funds can be used at a post-secondary educational institution participating in a student aid program administered by the U.S. Department of Education, including:

Community colleges
Public and private four-year colleges and universities
Graduate and post-graduate programs
Vocational and trade schools

Here are a few examples of schools you can use your CollegeInvest 529 College Savings Plan that you might not have ever thought of:

Hawaii Institute Of Hair Design - Hawaii
Wood County School Of Practical Nursing – West Virginia
American Academy Of Dramatic Arts – New York
Culinary Academy Of Austin – Texas
Bel-Rea Institute Of Animal Technology - Colorado

If there is a specific school you or your grandchild is interested in and would like to know if a 529 savings plan can be used there, visit http://www.savingforcollege.com/eligible_institutions/.

What if I really need that money for something other than college?

You can withdraw it, but 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 percent federal penalty tax. You’ll end up with a lot less money.

How do I make a qualified withdrawal?

You can withdraw money at any time after your contribution has been processed by CollegeInvest and the money is fully invested.
Complete a Withdrawal Request Withdrawal Request Form instructing the plan manager to send the money to you, the student or the student's school.
Retain documentation showing your withdrawal was used to pay for qualified higher education expenses.

Do I have to pay taxes on withdrawals?

Savings used to pay for qualified higher education expenses are free from federal and Colorado state income tax. Please note, 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.

Tax Benefits & Estate Planning Questions

What Are the Tax Rules for Gifting?

You can give up to $14,000 per beneficiary each year without incurring a gift tax or needing to report the gift on a tax return. Married couples can transfer a total of $28,000 per beneficiary.⁶

Does each grandchild need their own 529 account?

We generally recommend you establish a separate CollegeInvest savings account for each grandchild to whom you wish to give money. This allows you to do several things:

You can tailor the selection of 529 plan and investment option within that plan for each grandchild.
It is easier to keep your intentions clear. If all the funds are in the name of just one grandchild, your children could face a difficult time attempting to resolve the ultimate disposition of the 529 funds.

Can 529s Help in Succession Planning?

The unique advantage with 529 plans is that the value of the 529 account is removed from your taxable estate, yet you retain full control over the account - including the right to ask for the money back at any time, though taxes and penalties may be due for non-qualified withdrawals.

No other vehicle affords this combination of control and estate reduction. Click here to find out more.

Will I have to file a gift tax return?

If your contributions to a 529 plan for a grandchild, when combined with all other gifts to that child during the year, exceed the $13,000 annual exclusion, you must file a gift tax return (Form 709) and compute any gift tax and generation-skipping transfer tax.

It’s important to note that contributions to a 529 plan in excess of $14,000 in a single year ($28,000 for married couples) can be pro-rated over a five year period so as to keep your contribution amount at or under the $14,000 annual exclusion.⁶

If I still have questions, who can help me understand all this?

Estate, gift, and generation-skipping tax issues arising in connection with 529 Plans can be quite complicated. You, your grandchild, or his or her parents should consult with a qualified tax advisor or specialist regarding these issues and the specific application of these rules to their particular circumstances.

¹ Contributions 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 Restrictions apply. Please see the Plan Disclosure Statements.
⁴ 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. Contributions for which a Colorado income tax deduction was taken are subject to recapture in subsequent years in which non-qualified withdrawals are made.

⁵ Contributions 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.

⁶ Effective January 1, 2013 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.
⁷ Restrictions apply. Please see the Plan Disclosure Statements.

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 the 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 is an affiliate of Legg Mason Inc. Legg Mason, Inc., a holding company, with its subsidiaries is a global asset management firm. The firm is headquartered in Baltimore. The primary distributor for the product is Legg Mason Investor Services, LLC.

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.