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General Information

What are the benefits of investing with CollegeInvest?

Answer:
CollegeInvest Savings Plans allow Colorado residents to deduct every dollar you contribute to your account from your Colorado state income taxes in the calendar year you make the contribution¹.

Whether you are a Colorado resident or not, the earnings on a 529 savings account can grow federal and state tax-free if used for eligible expenses².

Your savings can be used for qualified higher education expenses at any eligible college, university, community college, trade, or vocational school in the country. Even internationally.

Should your Beneficiary get a scholarship or not attend school, you can change the Beneficiary at any time with no penalty to the account.

CollegeInvest offers one of the broadest range of investment options to meet your needs regardless of your saving and investment preferences. Including Colorado’s only FDIC-insured 529 savings plan³ eligible for the state’s tax deduction on contributions, and a stable value plan that guarantees a minimum annual rate of return currently at 2.49% for calendar year 2019⁴.

You can enroll directly for the Direct Portfolio Plan, the Smart Choice Plan, or the Stable Value Plan.
The Scholars Choice is available only through your financial advisor.

¹ Contributions are deductible from Colorado income tax for Colorado taxpayers in the calendar year of the contribution up to your Colorado taxable income that year, and 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 state and federal income taxes, as well as an additional 10% federal penalty.

³ The Smart Choice College Savings Plan is not insured or guaranteed by CollegeInvest, its Plan Managers, the State of Colorado, or its agencies. However, these funds are FDIC-insured in accordance with the current FDOC coverage limits.

⁴ The guarantee of the Stable Value Plus Plan is the obligation of Brighthouse Financial and only to the extent of the Funding Agreement.

Who can participate?

Answer:

Parents, grandparents, other relatives, even friends! There are no age or income restrictions to owning a CollegeInvest account. Nor do you have to be a Colorado resident or taxpayer.

In fact, you could open an account for yourself. If you’re seeking an advanced degree, looking for additional certification, wanting to finish college, or simply trying to keep up with new technology… a CollegeInvest college savings plan can get you there.

You can open as many accounts as you want. YOU control who receives the funds, when they’re withdrawn, and for what expenses. You can change the Beneficiary at any time.

Nor are there any restrictions on the number of accounts per Beneficiary.

And, anyone can contribute to your account.

When can I open a CollegeInvest savings plan?

Answer:

Today. Tomorrow. Anytime. Every dollar you save can help, whether your goal is to cover tuition and room and board or books and computers and fees and some tuition.

But, it’s best to begin when your child is young, as your savings have the opportunity to increase over a longer period of time. For example:

if you were to start saving when your child is 2 years old, putting aside $50/month for 16 years with a 5% return you could have potentially achieved $14,576 in total savings. If you were to wait until they were 5 years old, your savings would be 25% less.

Even if your child is approaching or already in high school, he or she can benefit from a CollegeInvest savings account to complement other financial aid funding sources such as grants, scholarships, and loans.

What are the eligible expenses covered by a 529 plan?

Answer:

Tuition
Required fees, books, and supplies
Certain room and board expenses
Computers (desktops, laptops, or tablets) and Peripheral Computer Equipment (such as mouse, keyboards, printers, scanners, and monitors)
Software (educational based)
Internet Access (excluding the bundled costs of phone cable and/or pay tv services)

What schools are eligible?

Answer:

Funds can be used at 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

For the most recent list of eligible schools, CLICK HERE

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

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

How do I open an account?

Online or by mail.

Answer:
Two out of every three accounts are opened online and in just a matter of minutes. But the option is yours. Once you have decided on which plan to participate in, select them under OUR SAVINGS PLANS and go to their ENROLL section for easy-to-enroll instructions.

Name the Account Owner

Answer:
Anyone who is a U.S. citizen or resident alien with a SSN or taxpayer identification number can be an account owner. You, your spouse, a grandparent, aunt or uncle, a friend! There are no age, income, or family member restrictions to own an account. However, there can only be ONE account owner per account. You, or they, will need their date of birth, SSN, and a current permanent U.S. address that is not a PO Box.

There is no limit on the number of accounts held by an account owner.

Name the Beneficiary

Answer:
A Beneficiary is the student who will receive the benefit of the savings account, for their qualified college expenses. It is not necessary that they be related to you, nor are there any age, income, or residency requirements. You can even name yourself as the Beneficiary. You can change the Beneficiary at any time.There can only be ONE Beneficiary per account. There is no restriction on the number of accounts per Beneficiary.

To open an account you will need their SSN, date of birth, and a permanent U.S. address that is not a PO Box.

Name a Successor (Optional)

Answer:
You have the option of naming a Successor on the account. If you do not, the Beneficiary becomes the Account Owner in the event of your death.

If you are going to name a Successor, you will need their SSN and a permanent U.S. address that is not a PO Box.

How much are you going to save, and how often?

Answer:
To activate your account you will need to make an initial contribution to the plan. You can open a CollegeInvest account with as little as $25 and virtually in any manner available: cash, check, bank transfer, direct deposit, or certain rollovers.

If you are going to make the initial contribution by transfer, you will need your bank account number and the bank’s routing number. (Possibly, a voided check.) You also have the opportunity to setup an automatic savings plan, or direct deposit, for continuing contributions to your account. You will need the specific bank/credit union/money market account information to complete the process.

Nearly half of our account owners enroll in an ongoing process for contributing to their accounts – it’s simple, and they know they’re adding to their potential savings effort and stress free.

Select a Plan and Enroll

Answer:
CollegeInvest offers one of the broadest and most flexible programs in the country, because we know that every individual or family has unique savings goals and preferences. Direct Portfolio, Smart Choice, and Stable Value Plus can be opened directly by you. Or, choose Scholars Choice if you are working with a financial advisor.

Here’s a Comparison Chart of our savings plans. If you have specific questions, click on the specific Plan and their contact information will be in the right-hand column for you.

Beneficiary Information

What is a Beneficiary?

Answer:
A Beneficiary is the person of your choosing who is entitled (by the Account Owner) to the benefits of the savings. They must be a U.S. citizen or alien resident with a SSN or valid taxpayer identification number. But there can only be ONE Beneficiary per account. There are no restrictions on the numbers of accounts for a specific Beneficiary. There are no age restrictions on the Beneficiary. The Account Owner does not need to be related to the Beneficiary. You can even name yourself as the Beneficiary.

They can be your son or daughter, a grandchild, stepchild, a favorite niece or nephew, or even yourself! The ‘technical’ list is very broad.

Can parents and grandparents open separate accounts for the same student?
Answer:
Yes, in fact this is quite common. There are no restrictions on the number of accounts for a specific Beneficiary.
Can I change my Beneficiary?
Answer:
Absolutely, and at any time. Just login to your account and complete the required form, or contact your plan manager directly.
Is my student required to go to college in Colorado?
Answer:
No. You may use your funds at any eligible public or private college, university, community college, vocational or trade school across the country – even internationally.
What if my student doesn’t go to college, or withdraws?

Answer:
You have three options:

You can simply leave the funds in the account should he/she decide to go back to learning. You can change the Beneficiary to another family member, or even yourself.

Or, you can withdraw the funds, subject to the tax consequences for non-qualified withdrawals. Generally, the earnings are subject to federal and state income taxes and a 10% penalty. And, the possible recapture of any state income tax deductions.

Beginning February 2016, if the student leaves school due to an illness, injury, or other emergency you have up to 60 days from receipt of a refund or returned deposits, to redeposit those funds into your CollegeInvest account without incurring any fees or tax penalties.

What if my student gets a scholarship?

Answer:
You have four options:

You can use your funds to cover other eligible expenses like room and board, books, supplies, computer/computer equipment or software or internet access that some scholarships don’t cover. You can change the Beneficiary to another family member, or even yourself.

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% federal penalty on the earnings portion. The earnings portion of your withdrawals may still be subject to state and federal income taxes. (You should carefully read the Plan’s Plan Disclosure Statement, or consult a tax advisor for your specific situation.)

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

Answer:
While any assets you or your student own will affect financial aid, 529 Savings Plans have some benefits over other savings accounts. 529s are generally viewed as a parental asset if the parent is the account owner. So the funds in a 529 account are weighed less heavily than other accounts owned by the student in the federal formula used by colleges to determine financial need.

If a grandparent owns the account and makes withdrawals for a student’s expenses, the student may have to report assets used as income the following year.

Note however, that financial aid provided by a college or university may differ from federally-determined financial aid.

Investment Options

Can I change my investment options?

Answer:
Yes. You can change the investment option for all or a portion of your assets for any reason, no more than two times 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”, possibly because the stock market may be stronger at the time. You are allowed to change your investment option (called a re-allocation) twice per calendar year.
This limitation applies on an aggregate basis to all accounts having the same Account Owner and the same Beneficiary.

Regarding Account Transfers: You can transfer assets from one 529 plan to another (thereby changing investment options) for the same Beneficiary once per twelve-month period. (Check with your plan for any restrictions on moving accounts within a plan.)

Regarding a 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.)

Please 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.

Are there fees related to my investment choices?
Answer:
Maintenance fees for our Plans range from 0-4% annually, but the vast majority of accounts average less than 1% each year. The most current fee information is detailed in the Plan Disclosure Statement (PDS) for your specific Plan.
What is an Age-Based Option?

Answer:
Generally referred to as a “set it and forget it” approach, the asset mix automatically changes as the Beneficiary gets older and closer to going to college. The allocation of assets is done automatically, at certain ages, so the owner doesn’t have to worry about managing the direction of the investment. When the child is younger and the timeline for growth is longer, the strategy is focused on earnings growth. So the asset mix will favor stocks. As the child gets older, the strategy changes to capital preservation to reduce the risk of losses to your earnings and/or your principal (the money you have contributed) and shift toward a mix of bonds and cash.

Our DIRECT PORTFOLIO Plan gives you three different options based on your risk tolerance – Conservative, Moderate, or Progressive. The investment mix for all three are set to change at the ages of 0-5, 6-10, 11-15, 16-18, and 19+.

The SCHOLARS CHOICE Plan gives you an Age-Based Option (approx. every 3 years) or Years to Enrollment Option with breaks at 10-12 years, 7-9, 4-6, 1-3, and less than one year.

Contributions

How do I contribute to my account?

Answer:
It’s so easy! Generally, you can contribute by:

  • Direct deposit of your Colorado Income Tax Refund – CLICK HERE for instructions specific to your Plan
  • Sending a check or money order
  • Making a one-time transfer from your checking account or savings account
  • Making periodic automatic transfers from either
  • Establishing payroll deductions from your paycheck

Certain rollovers from another state’s 529 plan or an UTMA/UGMA account are eligible, but please check with your Plan Manager specifically.

Can anyone else contribute to my account?

Answer:
Absolutely. Anyone can contribute to your account directly with the right information. Check with your Plan’s Disclosure Statement for the specifics, but it’s very easy to do.Birthdays, the holidays, and graduations are perfect opportunities to substitute a contribution for another toy or clothing. If they are a Colorado taxpayer, they also benefit from the Colorado income tax deduction on all direct contributions to a CollegeInvest account.*

Did you know you can make a gift to anyone else’s CollegeInvest account and receive a Colorado tax deduction for yourself? If you do make a contribution, and are planning to claim the deduction on your Colorado income tax form, click here to use our secure form to let us know. If you have any questions, please email us at general@collegeinvest.org.

* Contributions are deductible from Colorado income tax for Colorado taxpayers in the calendar year of the contribution up to your Colorado taxable income that year, and subject to recapture in subsequent years in which non-qualified withdrawals are made.

Are there minimum contribution requirements?

Answer:
Minimum to open an account:

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

Minimum for subsequent contributions:

Direct Portfolio: $25 ($15 if contributing by payroll direct deposit)
Scholars Choice: $25
Smart Choice: No minimums
Stable Value Plus: $25
Is there a maximum limit on Contributions?

Answer:
The maximum contribution limit across all CollegeInvest 529 plans for the same Beneficiary is $400,000. Once the aggregation of all account balances meets or exceeds this limit, additional contributions are prohibited but the account may still continue to accrue earnings.

For some Account Owners, this is a significant estate planning benefit in that contributions to 529s are considered completed gifts, and therefore removed from their estate.

Making Withdrawals

How can I use my savings?

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

  • Tuition
  • Fees
  • Some room and board expenses
  • Required books and supplies
  • Computers (desktops, laptops, tablets)
  • Peripheral Computer Equipment including printers, scanners, monitors, and keyboards
  • Software (educational based)
  • Internet Access (used primarily by the student, excluding the bundled costs of phone or cable/pay tv services)
Can I use my savings for K-12 expenses?

The Tax Cuts and Jobs Act of 2017 expanded the qualified use of 529 savings accounts by allowing withdrawals for K-12 tuition expenses.  Section 529 of the federal tax code sets the general rules of qualified tuition programs, which authorizes each state to administer its own program and determine its unique state tax treatment and other policies.

In Colorado, the intent of the state’s 529 college savings plan, CollegeInvest, is to encourage savings for higher education.  Colorado tax law remains unchanged and CollegeInvest 529 plans can only be used for qualified higher education expenses. Any other use, including K-12 tuition expenses, are considered non-qualified withdrawals and subject to penalties.

How do I make a qualified withdrawal?

Answer:
Complete a Withdrawal Request Form from your specific CollegeInvest Plan (available on our website). You will need your account information, and provide the reason for the withdrawal. You may elect to have the funds sent to you (the Account Owner), directly to the Beneficiary, or directly to the school.

   NOTE: Qualified withdrawals must occur within the same tax year as the expense is occurred to avoid penalties.

NOTE: Grandparents need to be aware that who receives the payment, and when may have an impact on the Beneficiary’s ability to receive other financial assistance (loans, scholarships, grants). Here’s a good explanation of how your distribution may affect a student’s eligibility.

Retain documentation for your own records showing your withdrawal was used to pay for qualified higher education expenses within the calendar year. 

Please review the Plan Disclosure Statement for your CollegeInvest Plan for their specific requirements. Consult your financial advisor or tax preparer for the related tax implications of your withdrawals.

Do I have to pay taxes on withdrawals?

Answer:
Savings used to pay for qualified higher education expenses (within the same calendar year) are free from federal and Colorado state income tax. If you are not a Colorado-resident and/or pay taxes in another state, you should check with that state or a tax advisor to determine the applicable state tax treatment.

Non-qualified withdrawals are subject to federal and state income tax on the earnings portion, and a 10% penalty on the earnings portion. State tax deductions may also be subject to re-capture in subsequent years.

What if my student only wants to go half-time?
Answer:
Savings can be used for all qualified higher education expenses other than room and board. If the student reduces their full time status and receives a refund for payments you made with your 529 account, you may re-contribute the refund to your 529 account. The re-contribution must be made within 60 days of receiving the refund to avoid tax penalties for an unqualified withdrawal.
What if I really need that money for something other than college?
Answer:
Non-qualified withdrawals are subject to federal and state income tax on the earnings portion, and a 10% penalty on the earnings portion. State tax deductions may also be subject to re-capture in subsequent years.

Gifting and Estate Planning Benefits

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

Also, everyone has a lifetime exemption of $5,600,000 for gifts, estates, and generation-skipping transfers before taxes are owed.

Assets are removed from the estate, but you retain control

Details:
Contributions to your 529 account are considered a completed gift for federal gift and estate tax purposes, therefore removed from your estate. They don’t reduce your $5.6 million unified gift and estate tax exemption. (Should you later revoke the account, though, the account’s value goes back into your estate.)

The maximum contribution level in Colorado is $400,000 per Beneficiary (across the aggregation of all accounts for the same Beneficiary).

Even though the assets are removed, you still retain full control of the account(s) and the funds – how it’s invested, why and when it’s withdrawn, and who receives the funds.

Contributions are free of federal gift taxes
Details:
Up to the annual limit of $15,000 per Beneficiary for individuals, $30,000 for couples. With no limit to the number of Beneficiaries.
Contribute 5 years’ worth of gifts in one year

Details:
As an individual, you can make a lump sum contribution up to $75,000 (5-years at $15,000 for each year) to get the immediate benefit of five years’ worth of gift tax exclusions. For each and as many Beneficiaries as you wish.

As a couple, you can double the impact to $150,000. And, you can repeat the opportunity every 5 years.

If you die during the 5-year period, a pro-rata portion of the contribution is added back to your estate.

Non-Qualified Withdrawals

Details:
A Non-Qualified Withdrawal is subject to federal and state income taxes on the earnings portion, and a 10% penalty on the earning portion. In addition, any state tax deductions for contributions may be subject to recapture in subsequent years.

Example:

You have $100,000 remaining in an account: $90,000 in contributions and $10,000 in earnings. You elect to withdraw all of the funds to you personally, for expenses that are not education-related.

Assumption: 28% federal income tax bracket 28% of $10,000 = $2,800
Assumption: 5% state income tax 5% of $10,000  = $500
10% Penalty on Earnings 10% of $10,000 = $1,000
Your final distribution would be  $93,900

(This is an example for illustration purposes only)