529 College Savings Plan

A 529 college savings allows you to save for higher education expenses through a tax-advantaged account. 529 plans are named after the section of the Internal Revenue Code that created them.

You can open a 529 College Savings Plan by investing as little as $250 per fund ($1000 Total). For an employer-sponsored program, you may invest as little as $25 per fund.

The maximum contribution limit is $250,000 for each Beneficiary. Multiple accounts for the same beneficiary will be combined to determine of the maximum contribution amount has been reached. Once the total account balance (including any earnings) reaches $250,000, we will not accept additional contributions or rollovers. If the account value is below $250,000, you can continue to contribute regardless of how much you have already contributed.

Can someone other than the Account Owner contribute to the 529 account?
Yes. Anyone can contribute to the account. However, only the account owner can make decisions regarding the account. Such decisions include taking withdrawals from the account, changing the account’s investments and changing the beneficiary.

How can I use the funds in my College Savings account?
You can use the assets in your College Savings account to pay for Qualified Higher Education Expenses.  Earnings withdrawn for any use other than Qualified Higher Education Expenses are subject to federal income tax and a 10% federal tax penalty. However, a withdrawal on account of the beneficiaries death, disability or receipt of a scholarship (to the extent of the scholarship award is subject to federal income tax but no federal tax penalty.

Can I change the Beneficiary on my 529 Account?
Yes. The Account Owner can change the beneficiary of a College Savings account at any time. To avoid federal income tax and a 10% federal tax penalty on earnings, the new beneficiary must be a member of the family of the previous beneficiary.

Is there a time limit for using the assets in the Savings Plan?
Yes. The account owner must use the assets in the account or designates a beneficiary within 30 years after the beneficiary graduates from High School or within 30 years after opening the account, whichever comes later. Requests for an extension of this time limit will be considered on a case-by-case basis.

*Tax provisions allowing for federal income tax-free withdrawals for qualified expenses expire 12/31/2010 unless extended by Congress. State tax laws and treatment will vary. If your state offers a plan, you may want to consider what, if any, potential state income tax benefits it may offer.

For more complete information about underlying fund investment objectives, risk, charges, limitations and expenses, please read the prospectus carefully before investing or sending money. The prospectus contains this and other information about the investment company. A prospectus is available from an Investment Representative at South Metro Federal Credit Union or by calling Rick Hoel at 952-445-0888 ext 19.

Investment products and services offered through CUSO Financial Services, L.P. (CFS), an independent broker/ dealer, are not NCUA/NCUSIF insured, not Credit Union guaranteed and may lose value. Representatives are employed by South Metro Federal Credit Union and registered through CFS (Member FINRA/SIPC).

*Representatives are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with residents of other states will only be made upon compliance with applicable licensing and registration requirements. The information in this website is for U.S. residents only and does not constitute an offer to sell, or a solicitation of an offer to purchase brokerage services to persons outside the United States.

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