Realizing your child's college goals can raise a lot of questions. Below are answers to the questions asked most often.

GENERAL QUESTIONS

What is a 529 College Savings Plan?

It's a tax-advantaged way for families to save money for college tuition and education-related expenses. The "529" refers to the section of the Internal Revenue Code that created these plans.

What is the University of Alaska (UA) College Savings Plan and what are some of the benefits?

It's a 529 plan offered by the Education Trust of Alaska and managed by the investment firm T. Rowe Price.

There are many benefits of the UA College Savings Plan:

  • A low minimum investment—you can start with as little as $25/month.
  • Your and/or your child's PFD can be used to fund an account.
  • Any earnings are tax-deferred and you pay no federal taxes on withdrawals for qualified educational expenses.
  • No income restrictions.
  • ACT Portfolio carries a tuition value guarantee.
  • A variety of low cost, no load and no commission investment options.
  • Gift and Estate Tax benefits.
  • Account holders choose how and when funds are used.
  • Professional investment management by T. Rowe Price.

Are there any eligibility requirements?

Any U.S. citizen with a U.S. address or resident alien with a U.S. address can open an account, and so can trusts, corporations, and other organizations. There are no income limitations or age restrictions.

How do I open an account and how much money do I need to get started?

You can start with as little as $25 if you enroll in our Automatic Monthly Contributions program. If you're starting with a one-time contribution, the minimum requirement is $250.

You can complete your application online anytime. Just click here to get started now. Also, you can download the forms, complete them, and mail them to us. Or you can request a kit be mailed to you. In addition, you can open an account through your PFD application or over the phone by calling us at 1-866-277-1005.

Who controls the account?

Only one person—referred to as the account holder—can open and control an account. If the account holder is a minor, a custodian must act on the minor's behalf. Each account may have only one beneficiary (future student), but you can open as many accounts for as many beneficiaries as you want.

Who can be a beneficiary?

Any U.S. citizen or resident alien, including the account holder, can be a beneficiary. The beneficiary must be an individual, not a trust or corporation. There are no income limitations or age restrictions. In fact, if you're thinking of going back to school, you can even open an account for yourself!

Will opening a 529 plan affect our chances for financial aid?

That answer varies from school to school. Typically, 529 plans aren't treated as an asset of the student. Any investments, however, may affect eligibility for need-based aid. Check with the schools you're considering to learn what their guidelines are.

What advantages does a 529 plan offer over an UGMA or UTMA?

  • The account holder maintains control over the account.
  • Any account growth is tax-deferred.
  • Distributions are exempt from federal income tax when used for qualified education expenses.
  • It's possible to make larger annual contributions without incurring the federal gift tax.

Please note that the availability of tax or other benefits may be conditioned on meeting certain requirements such as residency, purpose for or timing of distributions, or other factors as applicable.

What if my beneficiary doesn't go to college?

You can ask to have the funds paid out to the account holder, or the beneficiary, or name a different beneficiary. The new beneficiary must be a relative of the old beneficiary as defined by the IRS.

What if I move to another state?

You don't have to be an Alaska resident to participate, so you can continue to maintain your account and make contributions no matter where you live.

Contributions

How can I contribute to my account?

  • By check or money order. Credit cards are not accepted.
  • By electronic transfer, such as a wire transfer from your bank.
  • Through our Automatic Monthly Contributions—regular monthly deductions from your checking or savings account.
  • Through your PFD, by answering "Yes" to question six on your application.
  • By automatic payroll deduction.
  • By rolling over funds from another 529 plan, a Coverdell Education Savings Account, or a qualified U.S. Savings Bond.

Is there any limit on contributions?

Total combined contributions for any one beneficiary can go up to $400,000. Please note that it's okay for earnings to take your total account balance over that amount. The maximum contribution may or may not cover all college expenses.

Can I invest my Alaska Permanent Fund Dividend (PFD)?

Yes. Half of your PFD (and/or your child's PFD) can be contributed automatically to an account. Just answer "Yes" in the UA College Savings Plan box on your PFD application. You can also invest the second half of your PFD when you receive it. You can even have the other half automatically deducted from your checking account. (For more details, click here for the "PFD" section.)

Can friends and family contribute to my account directly through the PFD?

Yes. Half of anyone's PFD can be contributed automatically. Start by answering "Yes" to question 6 on your or your child's PFD application. When the PFD applicant receives notification from us confirming the upcoming PFD contribution, he or she should send a letter of instruction directing us to place the PFD contribution in the proper account. The letter must include the appropriate SSN as well as your account number and portfolio name. For each ensuing year a PFD is received, it will automatically be invested in the account unless we receive other instructions.

Can anyone contribute to an account?

Certainly! Friends and family may contribute to your 529 account. It is a great gift idea for holidays and birthdays. They can use the Gift Contribution Slip or contribution slip included in your quarterly statements.

Can I move assets from an UGMA/UTMA account to this 529 plan?

You can; however, this transaction may be taxable. Your 529 account will be set up with the minor as the account holder and beneficiary, and subsequent changes restricted.

Can I move money from my Upromise* account to the UA College Savings Plan?

Yes, you can move money at any time during your Upromise membership. You must send a letter requesting to withdraw contributions from your Upromise account. Your letter must include your full name and the exact amount you intend to withdraw (up to your total Upromise balance). Pending contributions are not eligible.

If your withdrawal request is more than $200, Upromise requires a Signature Guarantee certifying that your signature is genuine. Your bank can usually provide one. Withdrawal letters should be sent to:

Upromise
ATTN: Customer Care
P.O. Box 55555
Boston, MA 02205-5555

Since checks are mailed every calendar quarter, you should receive your Upromise funds within 12 weeks.

*This information is provided as a service to our Web site visitors. The UA College Savings Plan is not affiliated with, does not endorse, and is not endorsed by Upromise.

Distributions

How do I take a distribution from my account?

You can request a distribution over the phone by calling 1-800-478-0003, or you can complete a Request a Distribution Form and submit it by mail. Additionally, you may request distributions online (except from the ACT Porfolio) by logging into your account. Please allow up to two weeks for processing and mail time.

How far in advance should I request my qualified distribution?

You can take a distribution from your account anytime but if you have a payment deadline, you should request your distribution at least two weeks before your payment deadline to ensure there is adequate time for us to process and mail your distribution.

Who can request a distribution?

Only the account holder can request a distribution.

Do I have to submit proof of my educational expenses when requesting a distribution?

No, you do not. However, you should keep your receipts to substantiate your expenses to the IRS.

My beneficiary is a student at the University of Alaska, can you send the funds electronically to UA?

Yes! If you provide us with your beneficiary's UA ID number, we can transfer the funds electronically to his or her account at UA. Please make your request at least two weeks prior to your payment deadline.

What information should I have available when requesting a distribution for the University of Alaska from my ACT Portfolio account?

You will need:

  • The information needed to identify your account
  • The total amount you want distributed to the University on the beneficiary’s behalf
  • Your beneficiary's UA ID number

How can I find out how many ACT credits I have?

You can find this information on your quarterly statement. You can view a copy of your statement online after logging in to My Account. You can also call us at 1-800-478-0003 to get this information.

Tax Benefits

Are my contributions tax-deductible?

Not from federal taxes. In some cases, they may be deductible from state income tax. For example, Pennsylvania, Maine, Arizona, Kansas, Montana, and Missouri provide for state tax parity, whereby contributions to any 529 plan are eligible for the state's income tax deduction. Consult your tax professional for more information.

What are the gift and estate tax benefits?

Federal gift tax - Gifts to an individual that exceed $14,000 in a single year are subject to the federal gift tax. However, for 529 plans, gifts of up to $70,000 ($140,000 for a married couple) can be made in a single year and can be exempted when averaged over five years of tax returns.

Federal estate tax - If you die and there is money remaining in your account, it will be excluded from your estate for tax purposes. (There are exceptions, however, if your contributions were being averaged over five years as described above.)

Changes to an Account

Can I change the beneficiary of my account?

Yes, at any time. Or you can transfer a portion of your investment to another beneficiary—for example, if you have another child. Please note that the new beneficiary must be a member of the previous beneficiary's family, as defined by the IRS.

Can the account holder be changed?

Generally, yes, although special rules may apply to accounts with custodians. You can also name a successor account holder to take over for you in the event of your death, or if you are declared legally incompetent.

How can I change my address?

You can change your address online by logging in to "My Account" and filling out the "Address Change Request Form." You can also print and mail an Update Your Account Services Form, or call us at 1-800-478-0003.

How can I update my banking information?

You can update your banking information on our Update Your Account Services Form.

Investments, Fees and Expenses

What are my investment choices?

The Plan offers three investment approaches with multiple portfolio options. You can pick one or spread your investment over any combination of two or all three approaches.

How do the enrollment-based portfolios work?

Our eight enrollment-based portfolios are targeted to the expected college enrollment date of the beneficiary. These portfolios have more exposure to equities when the beneficiary is young and shift automatically to more conservative allocations as he or she approaches college age. Assets are moved to the Portfolio for College in the year corresponding to the name of the portfolio. For example, Portfolio 2021 moves to the Portfolio for College in the year 2021.

What are the special benefits associated with the ACT Portfolio?

This balanced portfolio offers many special benefits. It has a UA Tuition-Value Guarantee, which locks in UA tuition value. If you invest in this portfolio, each contribution you make locks in tuition credits for future use at UA. In addition, the Program Management Fee and Annual Account Fee are waived for investments in this portfolio.

Can I change the investments I've chosen? If so, when?

Each time you contribute to a beneficiary's account, you can select a different portfolio. You are allowed two reallocations between investment options in your 529 plan per calendar year. If you have already made two reallocations on your account this year, you cannot make another change until next year.

How can I track my investment's performance?

You can view performance by visiting the Performance Page. Also, if you access your account online, you can view your contributions since inception

What are the fees?

  1. There is a $10 Annual Account Fee, prorated across your accounts for the same beneficiary. That fee, however, is waived:
    • When you invest regularly through our Automatic Monthly Contributions or by payroll deduction.
    • Your Account is enrolled in electronic delivery of statements, confirmations, and other documents as they become available for electronic delivery (the annual Account Fee may be waived for certain account registrations that are not eligible for electronic delivery).
    • For each of the beneficiary's accounts when at least one account is invested in the ACT Portfolio.
    • If your total balance for a beneficiary is $25,000 or more.
    • If your combined account balance, regardless of beneficiaries, is $75,000 or more.
    • If the Account Holder (or Custodian, if applicable) is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client. Enrollment in these programs generally requires assets of at least $100,000 with T. Rowe Price.
  2. A 0.13% annualized Program Management Fee is charged to each portfolio, except the Total Equity Market Index Portfolio and ACT Portfolio. A 0.11% annualized Program Management Fee is charged to the Total Equity Market Index Portfolio. Each portfolio bears its share of the expenses of the underlying mutual funds in which it invests. The program manager fee and underlying mutual fund expenses are reflected in each portfolio's unit price. As with most investments, the portfolio also reflects some of the costs of the funds it invests in.

Eligible Education Expenses and Institutions

How can I use the funds in my account?

You can use the funds for any purpose. However, to enjoy the full federal tax benefits, and to avoid penalties, they must be used for qualified educational expenses at an eligible institution as defined by the IRS. Such expenses include:

  • Tuition and mandatory fees
  • Books, supplies, and equipment required for enrollment or attendance
  • Room and board for any academic period in which the beneficiary is enrolled at least half time
  • Certain expenses required for special needs students

How do I know which educational institutions are eligible?

Use the Federal School Code Search on the FAFSA Web site (www.fafsa.ed.gov) to search for a complete list of eligible schools.

Can these funds be used at out-of-state colleges?

Yes. They can be used federal tax-free at practically every college, university, and technical school in the United States. For a complete listing of eligible institutions, visit www.fafsa.ed.gov.

What if the money is spent on something other than a qualified educational expense?

The distribution may be subject to federal and state income taxes plus a 10% federal penalty. There are cases, such as in the event of a scholarship, appointment to a military academy, disability, or death of the beneficiary, where the distribution would not be subject to the 10% penalty, but may be subject to income taxes. Please see the Plan Disclosure Document for more information.

Is repaying a student loan considered a qualified educational expense?

No. The distribution may be subject to federal and state income taxes plus a 10% federal penalty.