As your child gets older and you prepare to start using the funds in your College SAVE account, the following are some important details to keep in mind:
- You can use your College SAVE account to pay for expenses at most eligible accredited, public or private, 2- and 4-year college, university and vocational schools worldwide. You can use your savings in the account for both undergraduate and graduate degrees.
- In order to qualify for federal and North Dakota state tax-free withdrawals on earnings, the money in your College SAVE account must be used for qualified education expenses.1
Accessing Match Account Balances
You cannot transact directly with your Match account.
If you have been awarded a Match, any qualified withdrawals generally will be taken from the College SAVE account and the related Match account when the qualified withdrawal is requested to be sent to the eligible higher educational institution. Assets held in the Match account will be withdrawn before assets held in the account owner’s College SAVE account. Payments from the Match account may only be made to the eligible higher educational institution. In the event you have been awarded a Match and request a qualified withdrawal other than to the eligible higher educational institution, the qualified withdrawal will only be taken from the College SAVE account.
Important Withdrawal Processes
Recent changes in legislature may also impact the way you use the funds in your College SAVE account. Withdrawals on earnings for the following qualified education expenses are also tax-free from federal and North Dakota state taxes.2
- Qualified higher education expenses at an eligible educational institution can include:
- Tuition, mandatory fees, books, supplies, and equipment required for enrollment;
- Certain room and board costs;
- Computers, computer software, Internet access and related services;
- And certain expenses for a special-needs student.1
- You may request a qualified withdrawal online within your College SAVE account or by mailing a Withdrawal Request Form to College SAVE.
- K-12 Tuition: Beginning in 2018, qualified education expenses can include tuition of up to $10,000 per student per year in connection with enrollment or attendance at an elementary or secondary public, private, or religious school (K-12).3
- Apprenticeship Programs: Beginning in 2019, qualified education expenses can include fees, books, supplies, and equipment at certain apprenticeship programs.4
- Student Loans: Beginning in 2019, qualified education expenses can include up to $10,000 of repayments (including principal and interest) on any qualified education loan of either a beneficiary or a sibling of the beneficiary.5
- Rollover to ABLE plans: Federal legislation now allows rollovers from 529 plans to Achieving a Better Life Experience (ABLE) accounts for the benefit of the same beneficiary or a member of the family of the beneficiary.6
Certain Tax Considerations:
- If a withdrawal is not used for a qualified education expense, it is subject to federal and state income taxes and a 10% federal penalty tax. Penalties only apply to non-qualified withdrawals, and only to earnings.
- Any accumulated earnings that are withdrawn from your account must be included on the income tax return of the recipient for the tax year in which they are distributed. Contact your tax advisor about how to report a non-qualified withdrawal.
- College students who receive refunds for tuition, room and board, or other qualified higher education expenses can re-contribute their refund back into their 529 plan account within 60 days of the date of the refund to avoid paying any penalty or taxes on the earnings. Be sure to check how a refund contribution may be treated under the laws of the state where you pay taxes.
If you’re not a North Dakota taxpayer, please consult with a tax advisor to determine your state’s treatment of the above qualified education expenses.
If you have questions about the College SAVE 529 Plan, you can reach our Customer Service team by phone at 866.SAVE.529, Monday through Friday from 8 a.m. to 8 p.m., Eastern Time.
- Qualified higher education expenses at an eligible educational institution can include:
1Earnings 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.
2 Since different states have different tax provisions, if you or your beneficiary, as applicable, are not a North Dakota taxpayer, the state(s) where you pay income tax may differ in its state income tax treatment of expenses for K-12 tuition, apprenticeship programs and student loan repayments. You should consult your own state’s tax laws or your tax advisor for more information on your state’s taxation of such withdrawals.
3 The $10,000 limit is in the aggregate across all 529 Plans per student.
4The apprenticeship program must be registered and certified with the Secretary of Labor under the National Apprenticeship Act.
5The loan repayment amount for an individual is subject to a lifetime limit of $10,000.
6Rollovers must be reinvested into an ABLE Plan within sixty (60) days of the withdrawal date. A Rollover for the same Beneficiary is restricted to once per 12-month period. Rollovers into ABLE Plan accounts are subject to the annual contribution limits for ABLE Plan accounts. A member of the family of a beneficiary means an individual as defined in Section 529(e)(2) of the Internal Revenue Code, as amended. Generally, this definition includes a beneficiary’s immediate family members such as a child or stepchild; a sibling, stepsibling, or half sibling; a parent, or stepparent; a grandparent; a grandchild; a niece or nephew; an aunt or uncle; a first cousin; a mother- or father-in-law, son- or daughter-in-law, brother or sister-in-law; or a spouse of any of the previous individuals, except first cousin.
Ascensus Broker Dealer Services is the distributor of the North Dakota College SAVE plan, Learn more about Ascensus Broker Dealer Services, LLC 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, LLC (ABD) is Distributor of the College Save.
Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You should also 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 college savings plan(s), or any other 529 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.
Vanguard and the ship logo are trademarks of The Vanguard Group, Inc. Upromise is a registered service mark of Upromise, Inc. All other marks are the exclusive property of their respective owners. Used with permission.