General

What is CollegeChoice 529?
CollegeChoice 529 is a Section 529 plan offered by the Indiana Education Savings Authority (Authority). Ascensus Broker Dealer Services, Inc. serves as the Program Manager. Ascensus Broker Dealer Services, Inc. and its affiliates (Ascensus) have overall responsibility for the day-to-day operations including investment advisory, recordkeeping and administrative services, and marketing. CollegeChoice 529 is designed to help individuals and families save for college in a tax-advantaged way and offers valuable advantages including tax-deferred growth, generous contribution limits, attractive investment options, and professional investment management.

How does CollegeChoice 529 work?
When you enroll in CollegeChoice 529, you choose to invest in one or more of nine different investment options, including a Year of Enrollment Option and Individual Portfolios, based upon your investing preferences and risk tolerance. All of the contributions made to your account grow tax-deferred and the distributions are free from federal and Indiana state taxes if used for qualified higher education expenses.¹

How do I open a CollegeChoice 529 account?
The easiest way is to enroll online. It only takes about 10 minutes. If you prefer to enroll by mail, complete the enrollment form and make an initial investment for the benefit of an individual (the beneficiary). You can open more than one account but each must be for a different beneficiary.

How much do I need to open an account?
You can get started with as little as $10 and make additional investments of $10 or more. You can also establish an Automatic Investment Plan from your bank account for $10 per month. More than one person can contribute to the same account until total contributions reach $450,000. After that, the account may continue to grow higher through investment earnings only.

What are the fees associated with CollegeChoice 529?
CollegeChoice 529 has no commissions, loads, or sales charges. The total annual asset-based fee varies from 0.14% to 0.64%, depending on the Portfolio you choose. In addition, annual account maintenance fee of $20 is charged to each Account. This fee is waived if you or your beneficiary are an Indiana Resident, or your Account balance is at least $25,000.

Who can open a CollegeChoice529 Direct Savings Plan account?
Any U.S. citizen or resident alien, 18 or older, or an entity that is organized in the U.S., with a Social Security number and U.S. street address, 18 or older, can open a CollegeChoice 529 account, regardless of income level. Parents, grandparents, other family, and friends can open an account for anyone they choose.

Who can contribute to a 529?
Any number of people can contribute to the same CollegeChoice 529 account, but total contributions cannot exceed $450,000 for all accounts for the same beneficiary in 529 plans sponsored by the State of Indiana.

Who can be a beneficiary?
Any person of any age (with a Social Security number) can be named as the beneficiary of a CollegeChoice 529 account. As account owner, you can select a child, adult or even yourself as beneficiary. If a beneficiary decides not to attend college, you can name another beneficiary who is a qualified member of the same family as the original beneficiary. Please see the Disclosure Booklet for more information on who qualifies.

Do I retain control of the money?
Yes. As account owner you choose the portfolios in which you invest, as well as the distribution of the funds.

Can I make an investment change in my account?
Yes. You can change the direction of your future contributions at any time. Federal law permits you to move the assets in your CollegeChoice 529 account to a different mix of investment options twice per calendar year.

Can I change the beneficiary of my account?
Yes. You can transfer your account to a member of the family of the beneficiary without incurring federal income tax or penalties.²

Can I open an account for an unborn child?
Technically, the beneficiary must have a Social Security number or other taxpayer identification number before an account can be opened. This is so the identities of both the account owner and beneficiary can be verified. However, if you would like to open an account for an unborn child, an account can be opened in your name as both the account owner and beneficiary. Then, once the child is born, the beneficiary ownership can be transferred to the child. If we're unable to verify your identities, the plan reserves the right to close your account or take other steps we deem reasonable. Your Social Security number is also required for tax-reporting purposes.

Can I open a CollegeChoice 529 account with the money from my child's UGMA/UTMA?
CollegeChoice 529 permits a custodian for a minor under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act (UGMA/UTMA) to apply funds previously held in an UGMA/UTMA account to open an account in the Plan and to fund additional contributions to such an account, subject to the laws of the state under which the UGMA/UTMA account was established. Such a transfer of funds is generally a taxable event and you should consult with a tax advisor before transferring UGMA/UTMA assets to a 529 Plan.

Can I rollover money from another 529 plan to CollegeChoice 529?
Yes. You may perform a federal income tax-free rollover from another 529 plan into your CollegeChoice 529 account for the same beneficiary once every 12 months. You may also perform a federal income tax-free rollover from another 529 plan into your CollegeChoice 529 account at any time when you change the beneficiary to a qualifying family member of the current beneficiary.

How can I make contributions to my account?

• Electronic funds transfer (opening contribution of $10) from your checking or savings account
• Automatic investment plan³ (opening contribution of $10) with scheduled contributions in set amounts from your checking or savings account
• Payroll deduction³ (of $10 or more) through participating employers
• Check (made payable to CollegeChoice 529 Direct Savings Plan)
• Rollover from another 529 plan
• Rollover from an Education Savings Account or a qualified Series EE or Series I U.S. Savings Bond
• Transfer from an UGMA/UTMA account
• Ugift (minimum of $10)
• Upromise (minimum of $25)

Are investments in CollegeChoice 529 guaranteed?
No. CollegeChoice 529 is not insured or guaranteed, with the exception of the Savings Portfolio, which is insured by the FDIC. Investment returns will vary depending upon the performance of the Portfolios you choose. Depending on market conditions, you could lose all or a portion of your investment.

What is Ugift^® - Give College Savings?
Ugift is an innovative program that lets you leverage your social networks to invite family and friends to help you save for college. To learn more, click here.

Ugift is a registered service mark of Ascensus Broker Dealer Services, Inc.

What is Upromise^® and how can it help me save for college?
Upromise is a free to join rewards program that can turn everyday purchases—from shopping online to dining out, from booking travel to buying groceries—into cash back for college. A percentage of your eligible spending will be deposited into your Upromise account. You can link your Upromise account to your eligible 529 account and have your college savings automatically transferred. Transfers from Upromise to a CollegeChoice 529 account are subject to a $50 minimum and do not count towards the Indiana state tax credit. Visit Upromise.com/Indiana to learn more and enroll.

Ugift is a registered service mark of Ascensus Broker Dealer Services, Inc.

Can I rollover my 529 funds into an IRA?
Effective January 1, 2024, 529 account owners will be able to rollover savings from their 529 plan account into a Roth IRA without incurring any federal income tax or penalty. The Roth IRA must belong to the same beneficiary, and the lifetime rollover limit is $35,000. To be eligible, the 529 account must have been open for at least 15 years and the rollover amount must have been in the 529 account for 5 years.

529 to Roth IRA rollovers will also count toward annual Roth IRA contribution limits, but Roth IRA income limits do not apply for this type of contribution. For more information, please read the Program Description.

Taxes

What tax benefits can I get from CollegeChoice 529?
Earnings grow tax-deferred and are free from federal income tax when used for qualified higher education expenses.¹ Qualified higher education expenses include tuition, mandatory fees, books, supplies, computers, and equipment required for enrollment or attendance; certain room and board costs during any academic period the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student.

Are there any special tax benefits for Indiana taxpayers?
Yes. If you are an Indiana taxpayer (resident or non-resident, married or individual), you are eligible for a state income tax credit of 20% of contributions to a CollegeChoice 529 account, up to $1,500 credit per year. This credit may be subject to recapture from the account owner (not the contributor) in certain circumstances, such as a rollover to another state's qualified tuition program or a non-qualified withdrawal.

Please note that, effective January 1, 2010, the Indiana state income tax credit will no longer apply to rollovers from another state's qualified tuition program or to transfers from the Upromise service into a CollegeChoice 529 account. All other contributions will continue to be eligible for the tax credit to the extent previously allowable.

For more information on the tax credit, see Frequently Asked Questions on the Indiana Education Savings Authority website. (Note: You will be leaving this website.)

What are the Plan's gift- and estate-tax benefits?
Individuals can invest up to $18,000 ($36,000 for married couples) per beneficiary without assuming any gift-tax consequences. You can also contribute up to $90,000 per beneficiary in a single year ($180,000 for married couples) and take advantage of five years' worth of tax-free gifts at one time.⁴ (Contributions are considered completed gifts and are removed from your estate, but you, as the account owner, retain control.) Upon the death of the account owner, money remaining in the account will not be included in the account owner's estate for federal estate tax purposes. For more information, consult your tax advisor or estate-planning attorney.

Using the assets of your CollegeChoice 529 account

How can I use the money in my account?
The money in your CollegeChoice 529 account can be used for any purpose. However, to qualify for federal tax-free withdrawals and avoid penalties¹, the money must be used for qualified higher education expenses for the beneficiary at an eligible educational institution.

What qualifies as a higher education expense?
Eligible expenses can include tuition, computers, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs during any academic period the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student.

Is paying off a student loan a qualified higher education expense?
Yes. You can use the assets in your Account to make an education loan payment. However, these payments will be subject to recapture of the Indiana state income tax credit.

Does my child have to attend college in Indiana?
No. You can use the assets in your account toward the costs of nearly any public or private, 2-year or 4-year college nationwide, as long as the student is enrolled in a U.S.-accredited college, university, graduate school, or technical school that is eligible to participate in U.S. Department of Education student financial aid programs. In fact, many U.S. colleges and universities now have campuses or locations outside of the country, where money from your CollegeChoice 529 account can be used.

What if my beneficiary does not go to college immediately after high school?
CollegeChoice 529 does not require the child to attend college immediately after graduating high school. There are no restrictions on when you can use your Account to pay for college expenses.

What if my beneficiary decides not to go to college?
If the beneficiary decides not to go to college, you have three options:

• Stay invested. You can leave the money in the account in case the beneficiary decides to attend school later. There is no age limit for using the money.
• Change the beneficiary. You can change the beneficiary on your account at any time provided that the new beneficiary is an eligible Member of the Family of the former beneficiary. Please see the Disclosure Booklet for more information on who qualifies.)
• Withdraw the money for other uses. The earnings portion of a withdrawal not used for a beneficiary's qualified higher education expenses is subject to federal and state income taxes and may be subject to a 10% federal penalty tax. (For exceptions to this penalty, please see the Disclosure Booklet.)

Additionally, any accumulated earnings that are withdrawn from your account must also be reported on the recipient's income tax return for the year in which they are withdrawn. Contact your tax advisor to determine how to report a non-qualified withdrawal.

What impact does a 529 plan have on eligibility for federal financial aid?
529 plan assets are counted at different rates for the Expected Family Contribution (EFC) in the FAFSA formula. As of July 1, 2009, federal guidelines are as follows:

• If the student is a dependent, a 529 plan account is considered as the parent's asset (if the account owner is the parent or the dependent student). As a result, it will generally be counted at a rate of only 3-6% of its value for the EFC.
• If the student is not a dependent and is the account owner, the 529 plan account is treated as the student's asset and is generally factored into the EFC at the higher rate of 20%.
• In other cases, the account does not count as an asset for federal financial aid purposes. (However, a student may have to report distributions received from the account as income for these purposes.)
  • Beginning with FAFSA applications for the 2024-2025 academic year, as part of the Consolidated Appropriations Act, distributions from a non-parent-owned 529 accounts will no longer need to be reported as the student’s taxable income on the FAFSA.

Note: Financial aid programs offered by educational institutions and other non-federal sources may have their own guidelines for the treatment of 529 plan accounts. For complete information about financial aid eligibility, you should consult with a financial aid professional and/or the state or educational institution offering a particular financial aid program, since rules and regulations often change.

What is the impact of a CollegeChoice 529 account on Indiana state financial aid?
If you and your beneficiary are Indiana residents, there is no impact on state financial aid. For more information on Indiana state financial aid, click here.

Upromise is an optional service offered by Upromise, Inc., is separate from the CollegeChoice 529 Direct Savings Plan, and is not affiliated with the State of Indiana. Terms and conditions apply to the Upromise service. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. Transfers from Upromise to a CollegeChoice 529 Direct Savings account are subject to a $25 minimum.

Upromise and the Upromise logo are registered service marks of Upromise, Inc.

¹ Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements. See the Disclosure Booklet for more details on qualified expenses.
² Section 529 defines a family member as: a son, daughter, stepson or stepdaughter, or a descendant of any such person; a brother, sister, stepbrother, or stepsister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the father or mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; the spouse of the beneficiary or the spouse of any individual described above; or a first cousin of the beneficiary. Gift or generation-skipping transfer taxes may apply. Please consult with your tax advisor for further information.
³ An investment plan of regular investment cannot assure a profit or protect against a loss in a declining market.
⁴ In the event the donor does not survive the five-year period, a pro-rated amount will revert to the donor's taxable estate.