What is a 529 Program?
529s are Qualified
Tuition Programs that offer you certain tax and estate planning benefits as you
seek to build assets to cover college funding costs. 529s are perhaps the most
compelling education funding vehicle available today. But remember, 529s are
complicated vehicles, and you should consult with your financial advisor or tax
advisor before deciding to invest in any Qualified Tuition Program. Employees
should contact the College Foundation of NC for details about the NC
529s offer you:
Flexibility
• There are no income restrictions on who can set up a 529 plan.
• Accounts can be set up for anyone of any age.
• You can even set up an account for yourself if you have higher
education plans for later life.
Tax Advantages
• Your 529 account grows free of Federal taxes, making a real
difference over the life of your investment.
• You make withdrawals, free of Federal income taxes for qualified
higher education expenses for students attending eligible institutions on at
least a half-time basis. Withdrawals used for other purposes may be subject to
income taxes and a 10% penalty tax.
• Gifts are not included in your taxable estate for Federal estate
tax purposes. Couples can gift $110,000 in one year for any Beneficiary - free
of Federal gift taxes. To avoid the gift tax, you must treat the contribution
as a series of five annual gifts and make no other gifts to the Beneficiary for
five years. Talk to your financial advisor about other conditions that may
apply.
• The features of Qualified Tuition Programs are complex and
involve significant tax issues. Certain features, including the exclusion from
income tax for qualified withdrawals, are scheduled to expire on
Control
• You can change Beneficiaries, if necessary, within certain
limits.
• You approve all withdrawals for qualified higher education
expenses.
• You may withdraw funds at any time, for any reason, although a
10% penalty on earnings may apply, and earnings may become subject to ordinary
income taxes at your effective tax rate, not the Beneficiary's.
Getting Started is Easy
After you have
consulted with your financial advisor, simply complete the 529 Enrollment
Agreement to begin saving for college free of Federal income tax. You can make
contributions to your National College Savings Program account in a number of
ways, including:
• Lump-sum contributions - as low as $200 to start
• Monthly contributions automatically from your bank account*
• Payroll deductions (if available from your employer)
An offer of interest
in the National College Savings Program may only be made by the Official
Program Description for the Program. You should carefully review the current
Program Description, which contains complete information, including information
about fees, expenses, and risks, before making a decision to invest.
Transfers/Rollovers
You may roll over
assets from other college savings vehicles to the National College Savings
Program, including:
• Existing 529 plan accounts
• UGMA/UTMAs
• Education IRAs (now known as Coverdell Education Savings
Accounts)
• US Savings Bonds
• Taxable savings and investment accounts
If you are
transferring or rolling over assets, you will need to complete a
Transfer/Rollover Form. There are important restrictions involved in
transferring or rolling over assets and you may incur fees and taxes. Please
consult your tax advisor and the program description for more information.
529
Program Info