Save for future college costs with this tax-advantaged savings plan.

529 College Savings Plan


Simply put, a 529 college savings plan is a smart way to help meet the rising costs of higher education. 529 college savings plans offer significant tax benefits and an exceptional degree of control and flexibility. What's more, 529 plans can be used for virtually any public or private institution of higher education in the United States and even many abroad.

The Scholars Choice 529 college savings plan can help your family save for college, graduate school, or vocational school.

By investing in this Plan, your investments will grow tax-deferred, and withdrawals used for qualified educational expenses are not subject to federal income tax. In addition, you maintain ownership and control how the money is used. 529 plans offer an exceptional array of tax benefits, flexibility, and control.

Highlights:

  • A way to for families to save for college
  • Available to investors nationwide
  • Proceeds can be used for any accredited college
  • An investment account with tax advantages
  • Cost-effective employer-sponsored plan investment options

The Scholar’s Choice 529 savings plan offers you exceptional benefits in saving for higher education needs:

  • Flexibility Anyone can contribute to 529 plans –Parents, Grandparents, Uncles, Aunts, etc. You can use your funds from the Plan at any accredited in-state, out-of-state, or international institution.
  • Federal Tax The contributions are after-tax (not deductible for income tax purposes). The investment grows tax free and withdrawals are tax free if utilized for the beneficiary’s accredited educational programs.
  • High contribution limits Maximum limits are in excess of $200,000. Enables the accumulation of enough assets to cover the entire cost of college.
  • Low maintenance Provides a hands-off way to save for college.
  • Control The individual, not the beneficiary, has control over how the money is used.
  • Estate Planning 529 plan assets are excluded from one’s estate and not subject to estate taxes. Individuals can contribute up to $14,000 ($28,000 for married couples) per beneficiary without incurring federal gift tax.
  • No Load Program The Plan uses special Employer-Sponsored investment options with no sales charges.
  • High Marks From Independent Sources. The Scholars Choice program through Legg Mason Ranked number 2 for the five year period by Savingforcollege.com (as of 12/31/15 and are based on the universe of advisor-sold plans for Class A share performance including maximum sales charges).

FAQs

A plan operated by a state or educational institution, with tax advantages and potentially other incentives to make it easier to save for college and other post-secondary training for a designated beneficiary, such as a child or grandchild.

Earnings are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board. Contributions to a 529 plan, however, are not deductible.

All Baystate and Baycare employees can participate. Team members can work directly with the plan provider to establish payment systems through their personal bank account.

You can enroll in this benefit anytime during the year.

A qualified, nontaxable distribution from a 529 plan now includes the cost of the purchase of any computer technology, related equipment and/or related services such as Internet access. The technology, equipment or services qualify if they are used by the beneficiary of the plan and the beneficiary's family during any of the years the beneficiary is enrolled at an eligible educational institution.

This means any computer and related peripheral equipment. Related peripheral equipment is defined as any auxiliary machine (whether on-line or off-line) which is designed to be placed under the control of the central processing unit of a computer, such as a printer. This does not include equipment of a kind used primarily for amusement or entertainment. “Computer technology” also includes computer software used for educational purposes.

No, it is only for 529 plan withdrawals. Such costs are generally not qualifying expenses for the American opportunity credit, Hope credit, lifetime learning credit or the tuition and fees deduction.

Congress created them in 1996 and they are named after section 529 of the Internal Revenue code. “Qualified tuition program” is the legal name.

Yes. You can set one up and name anyone as a beneficiary — a relative, a friend, even yourself. There are no income restrictions on either you, as the contributor, or the beneficiary. There is also no limit to the number of plans you set up.

Yes. Contributions cannot exceed the amount necessary to provide for the qualified education expenses of the beneficiary. If you contribute to a 529 plan, however, be aware that there may be gift tax consequences if your contributions, plus any other gifts, to a particular beneficiary exceed $14,000 during the year. For information on a special rule that applies to contributions to 529 plans, see the instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

No. Your state’s 529 plan may offer incentives to win your business. But you are allowed to contribute to any state’s 529 plan and still be eligible for all Federal income tax advantages.

Whoever purchases the 529 plan is the custodian and controls the funds until they are withdrawn.

A designated beneficiary is usually the student or future student for whom the plan is intended to provide benefits. The beneficiary is generally not limited to attending schools in the state that sponsors their 529 plan. But to be sure, check with a plan before setting up an account.

Yes. There are no tax consequences if you change the designated beneficiary to another member of the family. Also, any funds distributed from a 529 plan are not taxable if rolled over to another plan for the benefit of the same beneficiary or for the benefit of a member of the beneficiary’s family. So, for example, you can roll funds from the 529 for one of your children into a sibling’s plan without penalty.

The beneficiary can be changed to anyone including the donor. If there is no use for the funds for any beneficiary on an accredited program, funds can be withdrawn and all of the earnings are then taxable. Since the contributions were taxed on the front end, only the earnings will be taxable.

An eligible educational institution is generally any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education.

You can start one anytime. But the benefit of a 529 plan comes with the tax-free withdrawal of earnings that build up in the plan based on the contributions made. Like other types of savings accounts, earnings are usually a function of time. A 529 plan which is set up while the student is already enrolled in college or in other postsecondary education may not accrue enough earnings to be of immediate benefit. However, that doesn’t mean that such a student wouldn’t benefit from a 529 plan as his or her postsecondary education continues.

If you leave Baystate, your account will stay in place and you will continue to have access to the institutional pricing. You will continue to make contributions to the plan on an individual basis.

A good source is IRS Publication 970, Tax Benefits for Education.

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Contact Us

  • For enrollment assistance and account administration inquiries, please contact:
    Legg Mason 1-888-572-4652
  • For investments and advice, please contact:
    Vinings 1-844-455-4440