A 529 College Savings Plan is a state-sponsored, tax-advantaged savings plan that can help families and individuals save for higher education expenses. These plans offer a number of benefits, including tax-deferred growth and federal income tax-free withdrawals when used for qualified education expenses. This federal income tax-free treatment of qualified withdrawals and other federal tax benefits are now permanent for 529 plans through the passage of the Pension Protection Act of 2006.
Savings can be used at most accredited colleges and universities in the U.S. and at many colleges abroad. Qualified expenses include tuition, fees, eligible room and board, books, supplies and required equipment for attendance at a higher education institution.
In addition to the federal tax benefit, many states offer a state income tax deduction for contributions to their plans as well as state income tax-free withdrawals for qualified expenses.
Unlike money for some other college savings vehicles, the account owner maintains control over all of the funds in the 529 College Savings Account. 529 College Savings Plans also offer gift and estate tax planning benefits. Each plan offers a variety of low-cost investment options.
No sales charges, application or maintenance fees; low asset-based management fee — see the Program Disclosure booklet for details.
Minimum contribution is $25 per Investment Option, or $15 per pay period per Investment Option, through payroll deduction.
There is a lifetime maximum account balance of $300,000 or more, which varies by state.
The treatment of investments in a 529 savings plan varies by school. Assets are typically treated as the account holder's and not the student's. Any investments, including those in 529 accounts, may affect the student's eligibility to get financial aid based on need. Please check with the schools you are considering for details.
Contributions are available for withdrawal 10 days after receipt of contribution by Program Manager's transfer agent. Withdrawals for purposes other than qualified educational expenses are subject to income tax and can incur an additional tax of 10% on the earning in the account.
Qualified higher education expenses include tuition, mandatory fees, books, supplies and equipment required for the enrollment and attendance of the beneficiary at an eligible educational institution; and, under certain circumstances, room and board expenses.
Qualified higher education expenses also include certain additional enrollment and attendant costs of a beneficiary who is a special needs beneficiary in connection with the beneficiary's enrollment or attendance at an eligible institution. For this purpose, eligible educational institutions generally are accredited post-secondary educational institutions offering credit toward a bachelor's degree, an associate's degree, a graduate-level degree or professional degree, or another recognized post-secondary credential.
While in the account, earnings are federal and state income tax deferred. Withdrawals used for qualified higher education expenses are also exempt from federal income tax, and possibly state income tax. This federal income tax-free treatment of qualified withdrawals and other federal tax benefits are now permanent for 529 plans through the passage of the Pension Protection Act of 2006.
* These product features can vary from state to state. Please check your state's 529 Plan Program Brochure and Program Disclosure booklet for more details. If, after reviewing the website, you'd like to speak with a college savings consultant, please call 1 888 381-8283.
Consider the investment objectives, risks, charges and expenses before investing in any of the TIAA-CREF Managed 529 plans. Please call 1 888 381-8283 for a Disclosure Booklet containing this information. Read it carefully.
The tax information herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties. It was written to support the promotion of TIAA-CREF Managed 529 plans. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.
© 2008 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017
