When your child is ready for college, a 529 plan can help you be ready, too. The name "529" refers to the Internal Revenue Code section that discusses this type of college savings tool.
Most 529 plans are sponsored by individual states. To encourage their residents to save for college, many 529 plans offer significant tax incentives. For example, the College SAVE Plan, sponsored by North Dakota, offers a state tax deduction of up to $5,000 ($10,000 if married, filing jointly) to ND taxpayers.
Other special features of a 529 include:
Tax-deferred earnings: In a 529 plan, your assets grow tax-deferred (which means that the earnings on your contributions accumulate tax-free), so more of your savings can go toward paying for college instead of paying taxes.
Assumptions: $2,500 initial investment with subsequent monthly investments of $100 for a period of 18 years; annual rate of return on investment of 5% and no funds withdrawn during the time period specified; taxpayer is in the 30% federal income tax bracket for all options at the time of contributions and distribution. This hypothetical is for illustrative purposes only. It does not reflect an actual investment in any particular 529 plan or any taxes payable upon non-qualified distribution.
Tax-free withdrawals: When you're ready to use a 529, all withdrawals for qualified higher educational expenses are federal and state tax free1, including:
- Mandatory fees
- Books, supplies, and equipment required for enrollment or attendance
- Certain room and board costs
Managed portfolios: Contributions to a College SAVE 529 Plan are invested in professionally managed portfolios, including age-based portfolios that automatically adjust their investment as a child ages.
Account control: The account owner controls how and when the 529 funds are used, not the designated beneficiary.
Worldwide use: 529 savings can be used at any eligible 2 - or 4 -year college, university, vocational school, or technical institute anywhere in the U.S. or abroad, not just those in North Dakota.2 Search for eligible schools.
Flexibility of beneficiaries: Anyone with a Social Security number or taxpayer identification number can be a 529 designated beneficiary. That means a child, grandchild, niece, nephew, even yourself. In fact, if your designated beneficiary doesn’t attend school, you can use the funds for an eligible family member.3
Less impact on financial aid than other college savings vehicles. If the student is a dependent, your 529 savings are considered parental assets - which are generally weighted less when calculating Estimated Family Contribution (EFC). See our Frequently Asked Questions for details. For more about financial aid eligibility, contact a financial advisor, as well as the schools you’re considering.
1Earnings on non-qualified distributions may be subject to federal income tax and 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.
2An eligible institution is one that is eligible for federal financial aid programs.
3For designated beneficiary changes to occur without federal or state income taxes, the new designated beneficiary must be a Member of the Family of the former designated beneficiary.
This website contains links to other websites as a convenience to users. Neither the Plan, the State of North Dakota, Bank of North Dakota, nor Ascensus College Savings, Inc., Vanguard nor their respective affiliates, endorses or takes any responsibility for such websites or for any information contained therein, except, in each case, with respect to their own websites.
Ascensus Broker Dealer Services is the distributor of the North Dakota College SAVE plan, Learn more about Ascensus Broker Dealer Services, Inc. on FINRA's BrokerCheck.
For more information about North Dakota's College SAVE Plan (College SAVE), call 1-866-SAVE-529 (1-866-728-3529) or click here to obtain a Plan Disclosure Statement. Investment objectives, risks, charges, expenses, and other important information are included in the Plan Disclosure Statement; read and consider it carefully before investing. Ascensus Broker Dealer Services, Inc. (ABD) is Distributor of the College Save.
Before investing in any 529 plan, you should consider whether your or the designated beneficiary's home state offers a 529 plan that provides its taxpayers with state tax and other benefits that are only available through the home state's 529 plan. You also should consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state's 529 plan(s), or any other 529 college savings plan, to learn more about those plans' features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.
College SAVE is a 529 plan established by the State of North Dakota. Bank of North Dakota (Bank) acts as trustee of College SAVE Trust, a North Dakota Trust, and is responsible for administering College SAVE Trust and College SAVE. ABD, the Plan Manager, and its affiliates, have overall responsibility for the day-to-day operations of the Plan, including recordkeeping and marketing. The Vanguard Group, Inc. (Vanguard) provides underlying investments for the Plan. The College SAVE's Portfolios, although they invest in mutual funds, are not mutual funds. Units of the Portfolios are municipal securities and the value of units will vary with market conditions.
Investment returns are not guaranteed and you could lose money by investing in College SAVE. Participants assume all investment risks, including the potential for loss of principal, as well as responsibility for any federal and state consequences.
Not FDIC Insured. No Bank, State or Federal Guarantee. May Lose Value.
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