529 plans are extremely flexible
When we talk with Parents and Grandparents about saving for college, flexibility is at the top of their concerns. It’s also the most inherent benefit of 529 savings plans.
Change your Beneficiary at any time with a 529 college savings plan
At any time, you can change the Beneficiary of your account. The list of Beneficiary options is extensive: children, grandchildren, siblings, step-siblings, Parents, step-parents, cousins, nieces or nephews, in-laws, or the spouse of any of these.
What if they get a scholarship? Or decide not to go to school?
If your Beneficiary receives scholarship funds, your money is not frozen. There are three simple options that don’t incur penalties:
- Keep the plan funds in the account in case the situation changes.
- Change your Beneficiary to another family member or yourself.
- Roll over the money into another 529 college savings plan account.
Alternatively, 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 information in your plan’s Plan Disclosure Statement, or consult a tax advisor for your specific situation.)
Not just Colorado
You don’t have to live in Colorado to open a CollegeInvest account. Nor does your child or student have to go to college in the state of Colorado. Your savings can be used for qualified educational expenses at an eligible school anywhere in the country, and even outside of the United States in some cases.
“Eligible” means that the school participates in the federal loan program.
My grandchild may not want to go to a university
Our savings plans aren’t limited to just colleges or universities or graduate programs. Particularly in these times.
Your CollegeInvest account can be used at community colleges or trade schools, two-year nursing or medical technician programs, or a two-year online program on entrepreneurship and small business management. Even qualified special interest programs such as art schools, hair stylist and barber schools, chef or culinary schools, master plumber programs, and more. And even expenses for apprenticeships!
How about a marine biology program in the Caribbean? Or a PGA qualifying school in Florida or Arizona? Did we get your attention?
Change your 529 plan investments easily
Some Parents and Grandparents prefer to be more hands on with their investment options, whether it’s in reaction to market conditions, estate planning benefits, or family circumstances and life events.
As the Account Owner, you can change your investment options twice within a calendar year without penalties.
Common reasons 529 Account Owners change investment options:
- My son is nearing college age, so it’s a good general strategy to move from an aggressive posture to a conservative posture to reduce risk and protect my savings.
- My grandson is 15, and since I’m within my goal and want to turn my savings over to his Parents on his 16th birthday, it makes sense to move from an aggressive strategy to a protection strategy.
- I chose an age-based plan. And although my daughter has reached an age where the plan will automatically drop her to a less aggressive option, the markets are strong, so I want to keep on that same aggressive growth path.
- The current stock market and mutual funds are growing and the near term looks to keep up that trend, and I want to play the market so I can go more aggressive, or switch between funds.
- The market is slowing down, so I’d like to shift to a more conservative strategy to protect my savings.
More 529 plan benefits:
For Colorado taxpayers, contributions to any CollegeInvest 529 account can be deducted from your Colorado state income tax return. Your earnings grow free of federal and state taxes.
You as the Account Owner control the number of accounts, the Beneficiaries, how much to save, what you pay for and when, and more. With the flexibility to change any of these when YOU want to.