The Answer Sheet: College SAVE

A 529 plan is an investment account that you can use for education savings.

• Tax-deferred earnings: The earnings on your contributions accumulate federal and state tax free, so more of your savings can go toward paying for college instead of paying taxes.

• Tax-free withdrawals: Withdrawals for qualified expenses are federal and state tax free.

• Managed portfolios: Contributions to a College SAVE 529 Plan are invested in professionally managed portfolios.

• 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 two- or four- year college, university, vocational school, technical institute, K-12 school, or apprenticeship program anywhere in the U.S. or abroad, not just those in North Dakota.

• 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.

• 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).

• Use College SAVE 529 assets to pay K–12 tuition. Qualified education expenses also include tuition of up to $10,000 per student per year at an elementary or secondary public, private, or religious school (K–12). See the Qualified Withdrawals page for more details.

• 529 plans can be rolled over to ABLE plans. This is allowed without incurring federal taxes up to the annual Achieving a Better Life Experience (ABLE) contribution limit and North Dakota state taxes.

Any U.S. citizen or resident alien, 18 or older, with a Social Security number or taxpayer identification number and a U.S. street address (not a post office box) can open a College SAVE account, regardless of income level or state of residence. Certain other types of entities, like those funding a trust or scholarship, may open an account as well. Click here to learn more.

The College SAVE 529 Plan offers qualified withdrawals on many higher education expenses, K-12 tuition, apprenticeship programs, student loans, and rollovers to ABLE plans. Click here for more details.

Anyone can contribute to an existing College SAVE account, but total contributions cannot exceed $269,000. The easiest way for third parties to contribute to your College SAVE account is to use Ugift. Please see the College SAVE Plan Disclosure Statement for complete information regarding contributions.

As soon as you can. The more time you allow yourself to save for college, the better. To help you get started, BND will match up to $200 in contributions for every newborn (up to 12 months old) residing in North Dakota!

Yes. The designated beneficiary may be of any age, from newborn to adult, as long as they have a Social Security number or taxpayer identification number. There are no restrictions on a designated beneficiary’s state of residence or income.

You have three options if your beneficiary decides not to go to college:

• Stay invested. You can leave the money in your account in case the designated beneficiary decides to attend school at a later time. There is no age – or time – limit for using the money.
• Change the designated beneficiary. You can change the designated 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 Plan Disclosure Statement for more information on who qualifies.
• Withdraw the money for other uses. The earnings portion of a withdrawal not used for a designated beneficiary’s qualified 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 Plan Disclosure Statement.)

The Bank of North Dakota College SAVE Plan offers a state tax deduction of up to $5,000 ($10,000 if married, filing jointly) to North Dakota taxpayers.

Try this tool to set your savings goals. Choosing to save any amount will help and with College SAVE you can contribute as little as $25.

You can find one here.