PLANNING RESOURCES
Top 529 myths
Quick links
Join us Tuesday morning at 11 for our next 529 webinar.
529 college savings plans can be confusing, and people may have misconceptions about how 529 college savings plans work. Here is the truth.
Fiction: The assets in your SSGA Upromise 529 Plan account can only be used at schools in your home state.
Fact: You can use the assets in your SSGA Upromise 529 Plan account at any eligible school around the country and abroad, including 2- and 4-year colleges, graduate schools (including law and medical), and vocational/technical schools.1
Fiction: You can only use the assets in your SSGA Upromise 529 Plan account to pay for tuition.
Fact: You can use your SSGA Upromise 529 Plan account assets for many higher education expenses, including tuition, fees, and certain room and board costs.2
Fiction: It costs a lot to open and maintain an account.
Fact: You can open a SSGA Upromise 529 Plan account with as little as $15. You can also set up payroll direct deposit for $15 per paycheck or an automatic investment plan (AIP) for $15 per month.3 To help families save more, the SSGA Upromise 529 Plan offers additional programs, like Ugift — Give College Savings, which allows account owners to invite family and friends to make gift contributions, and Upromise rewards, a service that lets account owners earn college savings when they shop online, dine out, and more.4
Fiction: You have to make a lot of investment decisions.
Fact: We've made it easy. The SSGA Upromise 529 Plan offers four types of investments. The College Date Portfolios are designed to make investing as easy as selecting the year in which the beneficiary is expected to start college. With a college date investment option, the portfolio's investment track is automatically adjusted from more aggressive to more conservative as your beneficiary grows older (and closer to the selected college date year). If you prefer investing in strategies that are designed specifically to match the level of risk you are comfortable taking on in your account, then the Risk-Based Portfolio choices may be a good fit for you. You can also choose from 15 Static Portfolio options to create your own personalized investment mix. Lastly, The Savings Portfolio is a lower-risk, Federal Deposit Insurance Corporation (FDIC)-insured option for account owners seeking a conservative investment choice for their college savings.
Fiction: It's too late to start a 529 plan.
Fact: It's never too late. Even if your student is in high school you can benefit from a 529 plan. Earnings grow federal tax deferred in a SSGA Upromise 529 Plan account, and when you withdraw the money for a qualified higher education expense, it's federal tax free.2 Any assets not used can be rolled over to another family member (as per Plan rules).
Fiction: You make too much money for a 529 plan account.
Fact: There are no income limitations for the SSGA Upromise 529 Plan. In fact, as part of the tax advantages offered by a 529 plan, account owners can contribute $17,000 ($34,000 if married, filing jointly) in a single year without incurring a gift tax.
Fiction: A 529 plan is only for kids.
Fact: There's no maximum age for a 529 plan. Are you considering career retraining or an advanced degree? As long as your school is eligible, you can use your 529 plan assets — even if you're not attending full-time.
Fiction: If the child doesn't go to college, you lose your money.
Fact: The 529 plan account owner controls the account. That means you can change your beneficiary to another eligible “member of the family” (as per IRS rules) with no tax penalty.5
Fiction: Only a parent can be an account owner.
Fact: Parents, grandparents, aunts, uncles, friends…almost anyone can be an account owner.6 You can also open an account for your own education.
Fiction: It's difficult to open up a 529 plan account.
Fact: It's fast and easy to enroll online. You can open an SSGA Upromise 529 Plan account at nevadas529.com.
Fiction: It's too hard for family members to contribute to my child's 529 plan account.
Fact: Using Ugift, family members or friends can easily contribute to any of your accounts. Contributions can be made online or by check, with no service fees or registrations for the gift giver.
1 An eligible institution is one that can participate in federal financial aid programs.
2 Earnings 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.
3 A plan of regular investment cannot assure a profit or protect against loss in a declining market.
4 Upromise rewards is an optional service offered by Upromise, Inc., is separate from the SSGA Upromise 529 Plan, and is not affiliated with the State of Nevada. Terms and conditions apply to the Upromise service. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. Upromise, Inc. is affiliated with Sallie Mae Bank.
5 You should consult with a tax advisor when considering a change of beneficiary.
6 You must be a U.S. citizen or resident alien, have a Social Security number or tax Identification number, and have a permanent U.S. address (not a P.O. Box).
