The CollegeSure®CD
The InvestorSure®CD
Fixed Rate CDs
The Montana Family Education Savings Program Bank Plan
(MFESP Bank Plan)
Arizona Family College Savings Program (AFCSP)
Indiana CollegeChoice CD 529 Savings Plan (CollegeChoice CD)
The CollegeSure CD
How does the CollegeSure CD work?
The CollegeSure CD is a variable rate certificate of deposit that offers an annual percentage yield tied to college inflation, as measured
by the change in the College Board's Independent College 500® Index (IC 500®). It's backed by the full-faith and
credit of the U.S. Government to at least $250,000 per depositor.
CollegeSure CDs pay interest annually on July 31st each year they remain outstanding. The interest rate is equal to the prior year’s college inflation rate as measured by the College Board’s Independent College 500 index change less an issue margin, and is subject to a maximum interest rate which is equal to the first year’s interest rate plus an interest rate cap. The interest rate on the CollegeSure CD is reset annually on July 31 based on the change in the IC500 index. The issue margin and the interest rate cap are determined on the contribution date.
For more information, view the
CollegeSure CD Terms and Conditions.
Deposits of as little as $250 purchase CollegeSure CDs. Direct deposits of as little
as $25 a month or $25 per pay period will accrue interest in an Accumulator Account.
CDs will automatically be purchased each time your Accumulator balance reaches $250.
For each CollegeSure CD purchased you'll receive a confirmation notice. And, each
July 31 you will receive an annual statement detailing account balances, transactions
and earnings that occurred during the year.
Are there any enrollment fees?
No. There are no enrollment fees, management charges or other expenses to erode your
investment.
What interest rate will I earn?
CollegeSure CDs pay interest annually on July 31st each year they remain outstanding. The interest rate is equal to the prior year’s college inflation rate as measured by the College Board’s Independent College 500 index change less an issue margin, and is subject to a maximum interest rate which is equal to the first year’s interest rate plus an interest rate cap. The interest rate on the CollegeSure CD is reset annually on July 31 based on the change in the IC500 index. The issue margin and the interest rate cap are determined on the contribution date.
For the past twenty-five years, the annual college inflation rate has ranged from a
high of 14.35% to a low of 4.15%. For the year ended July 31, 2011, the college
inflation rate was 4.36%.
How is the CollegeSure CD priced?
View the CollegeSure CD Pricing
webpage to see issue margins and interest rate caps, effective March 28, 2011.
Should the CD maturities coincide with anticipated attendance at college or
graduate school?
Yes. Maturities are available from 1 to 22 years. You should time your CDs to mature
the years your child attends college and/or graduate school. In most cases, CDs are
subject to early redemption penalties for withdrawals prior to maturity.
Can others contribute to my child's account?
Yes. A person need not be an account owner to contribute to a child's account.
Must I select a college now?
No. Simply begin making deposits and on each confirmation notice we'll report how
much college you've prepaid. If you'd like to target a specific college, just
call 1-800-888-2723 and we'll help you build a savings plan to meet your funding
goals.
Is my money safe?
Yes. Principal and interest are backed by the full faith and credit of the U.S.
Government to at least $250,000 per depositor.
Can I obtain more than $250,000 of FDIC insurance coverage?
Yes. The basic federal deposit insurance coverage is $250,000 per depositor. However,
the way your accounts are structured can provide maximum insurance protection. In fact,
a family of four can have as much as $3 million in FDIC protection of principal and
accrued interest.
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InvestorSure FAQ
How does the InvestorSure CD work?
The InvestorSure CD is a variable rate certificate of deposit indexed to the Standard
& Poor's® 500 Composite Stock Index (S&P 500®) and FDIC-insured to at least $250,000 per depositor.
Unlike many investments, the InvestorSure CD does not risk
principal.
Should the value of the S&P 500 decline over the investment period, you will
receive your full investment back at maturity. Investments held to maturity will also
receive at least 70 percent of the average increase in the S&P 500 based upon specific a
formula. InvestorSure CDs are issued exclusively by College Savings Bank.
While historical rates of return are never a guarantee of future performance - if
the InvestorSure CD was available, the previous 80 maturing CDs (ending May 2008) would
have produced an average annual percentage yield (APY) of at least 5.40%.
For more information, view the
InvestorSure CD Terms and Conditions.
Deposits of as little as $250 purchase an InvestorSure CD. Direct deposits of $25 a month or more or $25 per pay period will
accrue interest in an InvestorSure Accumulator Account. CDs will automatically be
purchased if your Accumulator balance exceeds $250 on a CD issue date. For each
InvestorSure CD purchased you'll receive a confirmation notice. And, each July 31
you will receive an annual statement detailing account balances and transactions that
occurred during the year. Customers will also receive quarterly statements after
October 31, January 31 and April 30.
Are there enrollment fees?
No. There are no enrollment fees, management charges or other expenses to erode your
investment.
What interest rate will I earn?
You'll earn an interest rate tied to the average increase in the S&P 500 and
based on a formula. The chart on the InvestorSure CD product page
illustrates the historical average annual percentage yield for each InvestorSure CD
issued during the time periods noted.
How is the InvestorSure CD priced?
Each InvestorSure CD pays a participation rate that is between 70-100% of the average
increase in the S&P 500 from issue date to maturity and based on a formula. The
exact participation rate of each CD will not be determined until the day the CD is
issued. As an investor, you should assume that the rate is 70% when making your
investment decision.
College Savings Bank uses a complex formula to determine the participation rate and
it requires data only available on the day of issue. While the Bank will always strive
to offer the InvestorSure CD at 100% of the S&P 500, it is not reasonable to assume
this can be done for every issuing of the CD.
What are my choices upon maturity?
CSB will provide written notification at
least 60 days before the Maturity Date. Thereafter, you must
provide written instructions at least 30 days prior to the Maturity
Date if you would like the proceeds upon maturity of
the InvestorSure CD to be invested other than in accordance
with the Default Actions described in this document. If you
provide us with instructions in good order, funds will be
disbursed from your Account no later than the first Business
Day following the Maturity Date.
If CSB does not receive instructions at maturity, we will take
one of the following default actions:
- If the Beneficiary will be 17 years of age or younger by
December 31 of the year in which the CD matures, the
Bank will transfer the matured funds to a 1-year Fixed
Rate CD under the then current terms and conditions
for issuing Fixed Rate CDs;
- If the Beneficiary will be 18 years of age or older by
December 31 of the year in which the CD matures,
the Bank will hold the matured funds in a Savings
Account until you provide distribution or other
investment instructions.
Alternatively, you may choose one of the following
alternative options at maturity:
- Transfer the matured funds to a CollegeSure CD;
- Transfer the matured funds to a 1- or 3-year
Fixed Rate CD;
- Reinvest the matured funds in another InvestorSure CD
under the then current terms and conditions;
- Rollover the matured funds to another qualified program;
- Hold the matured funds in a Savings Account; or
- Take a Qualified or Non-Qualified Distribution
of the funds.
Please note that any actions other than taking a Qualified or
Non-Qualified Distribution or a default action stated above,
could be considered your once per calendar year investment
exchange as per 529 plan rules.
Is my money safe?
Yes. Principal is backed by the full faith and credit of the U.S. Government to at
least $250,000 per depositor.
Can I obtain more than $250,000 of FDIC insurance coverage?
Yes. The basic federal deposit insurance coverage is $250,000 per depositor. However,
the way your accounts are structured can provide maximum insurance protection. In fact,
a family of four can have as much as $3 million in FDIC protection of principal and
accrued interest.
Are there alternative investments available under the
program?
Yes. For more information call 1.800.888.2723 or visit our product page.
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Fixed Rate CDs
How do Fixed Rate CDs work?
Fixed Rate CDs earn a fixed rate for the entire term of
the CD (1- and 3-years), determined at the time the CD is
opened. The rate will appear on your deposit confirmation
along with the annual percentage yield (APY).
The minimum initial contribution is $250. Subsequent contributions are also $250. Additional contributions may not be made to existing CDs but may be made into an existing Account to purchase new CDs offered by College Savings Bank.
If you do not intend to contribute $250 at one time, you may contribute $25 per month through direct deposits from your bank or brokerage account, or $25 per pay period using payroll deduction. Direct deposit contributions or payroll deductions are held in an Accumulator Account until the balance of your Account reaches $250. Once the funds reach the $250 level, they are used to purchase a Fixed Rate CD.
Are there any enrollment fees?
No. There are no enrollment fees, management charges or other expenses to erode your
investment.
What interest rate will I earn?
The APY is published
online at www.collegesavings.com. Account Owners will
receive the published interest rate on the Contribution Date,
except for online deposits where the Account Owner will
receive the APY applicable at the time of the day when the
online application and funding are complete. If you prefer to
mail in a check to fund the CD, the Account will be opened
at the applicable interest rate for the term selected on the
Contribution Date.
Contributions are credited to your
Account as follows:
- Contributions by check received before 2:00 p.m. Eastern
time are credited on the same Business Day. Contributions
by check received after 2:00 p.m. Eastern time are credited
the next Business Day.
- Contributions by E-Check and credit card are credited on
the next Business Day.
- Contributions by ACH or wire transfer are credited on the
Business Day the Bank receives the funds.
Accrual, Crediting and Compounding. Interest begins
to accrue on the Contribution Date, and is computed based
on the daily balance of the contribution and the actual
number of days elapsed divided by 365. Interest is compounded
and credited to your Account annually. Interest accrued on
your Account will not be paid until maturity of the CD.
No interest will be earned after maturity unless the CD is
renewed for another term.
Can others contribute to my child’s account?
Yes. A person need not be an account owner to contribute to a child’s account.
Must I select a college now?
No. Simply begin making deposits and on each confirmation notice we’ll report how
much in college expenses you’ve saved. If you’d like to target a specific college, just
call 1.800.888.2723 and we’ll help you build a savings plan to meet your funding
goals.
Is my money safe?
Yes. Principal and interest are backed by the full faith and credit of the U.S.
Government to at least $250,000 per depositor.
Can I obtain more than $250,000 of FDIC insurance coverage?
Yes. The basic federal deposit insurance coverage is $250,000 per depositor. However,
the way your accounts are structured can provide maximum insurance protection. In fact,
a family of four can have as much as $3 million in FDIC protection of principal and
accrued interest.
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MFESP Bank Plan FAQ
It's a tax-advantaged program created by the state of Montana to encourage families
to save for their children's higher education. The MFESP Bank Plan was established as a
qualified tuition program under Section 529 of the Internal Revenue Code. The Board of
Regents (BOR) has contracted with College Savings Bank to serve as manager of the
program. For more information about the MFESP Bank Plan, visit mfesp.com.
Your earnings grow tax free while you control the assets. When the time comes to use
the money for college, earnings distributed to pay qualified higher education expenses
are also 100% tax free.
Montana residents may deduct from Montana taxable income the amount of their
contributions up to $3,000 per year single/$6,000 per year married couples filing
jointly. Upon withdrawal from accounts opened at least three years, deductions are not
subject to recapture if the money is used to pay qualified higher education
expenses.
Yes. A contribution may not be made if it would cause the sum of all 529 accounts for
the same designated beneficiary to exceed the lesser of the balance limit, currently
set at $340,000, or the cost in current dollars of the qualified higher
education expenses that the account owner reasonably anticipates the designated
beneficiary will incur.
Any U.S. taxpayer, regardless of income, may establish a tax-favored college savings
account for anyone - including themselves.
Yes. A person need not be an account owner to contribute to a child's account.
However, Montana residents who make deductible contributions must establish their own
accounts (or jointly with spouse).
It is any institution eligible to participate in a student aid program administered by
the U.S. Department of Education. It includes virtually all accredited, public,
nonprofit and proprietary postsecondary educational institutions. To find out if a
specific institution is eligible, review the 2011/2012 Federal School Code database. If the institution has
been assigned a federal school code by the Department of Education, then it is
considered eligible under Section 529.
No. Funds can be used to pay for tuition, fees, textbooks, supplies and equipment that
are required for the designated beneficiary to attend an eligible institution. If the
student's enrollment qualifies for at least half-time, room and board expenses are
also eligible up to a specified level.
The account owner must submit a Distribution Authorization Form.
Funds up to the amount of a qualified scholarship can be returned to the account owner
without incurring the 10% federal tax penalty.
The account owner may either close the account or change the beneficiary. If the
account is closed, the funds are subject to a nonqualified distribution penalty in
addition to tax reporting.
Qualified expenses include tuition, fees, books, supplies and equipment that are
required for enrollment or attendance of the designated beneficiary at an eligible
educational institution. If the student's enrollment qualifies as at least half time,
room and board expenses are also qualified expenses up to a specified level.
Nonqualified distributions are withdrawals made for purposes other than for qualified
higher education expenses. Exceptions include withdrawals relating to the death or
permanent disability of the beneficiary.
The account owner may withdraw funds at any time. The account balance with earnings
will be refunded. However, this refund is subject to a federal nonqualified
distribution penalty equal to 10% of earnings. CD early redemption penalties may also
apply. Montana residents who deducted contributions from their taxable income may be
subject to tax recapture.
Yes. The account owner and beneficiary may be changed to certain other family members.
There is no fee for the first change of owner or beneficiary. Thereafter, a $50 fee may
be imposed for each change.
If your income qualifies to make a Coverdell ESA contribution you may contribute to
both the MFESP and a Coverdell ESA for the same beneficiary, in the same year. Amounts
may be withdrawn tax free from an ESA to make contributions to the MFESP.
Participation in the MFESP does not disqualify you from claiming the Hope and Lifetime
Learning Credits if you so choose.
Program assets will be considered if the student applies for state or federally
sponsored financial aid or scholarships. If the account is owned by the parent, account
balances are generally included in the asset of the parents rather than the student.
Beginning July 1, 2009, section 529 accounts owned by or for the sole benefit of the
student (such as custodial accounts) also will be treated as assets of the parents for
federal financial aid calculations. (As a result of a peculiarity in the Higher
Education Act of 2005, until July 1, 2009, student owned section 529 accounts (such as
in a custodial account) will not be treated as the student's or parent's assets
for financial aid purposes.) Section 529 account distributions that are not included in
taxable income are not treated as student or parent income for purposes of federal
financial aid calculations. An account owner should check the applicable rules for
financial aid programs and scholarship programs before withdrawing funds to pay
qualified higher education expenses.
Under Montana law, a student loan program, student grant program, or other financial
assistance program established or administered by the State of Montana or a financial
assistance program administered by a college or university supported by the State of
Montana must treat the balance in an account as an asset of the parent of the
designated beneficiary and not as a scholarship or grant or as an asset of the student
for determining a student's or parent's income, assets or financial need. However, this
rule does not apply if it is inconsistent with requirements of federal law or a
specific grant establishing a financial assistance program.
No. The program is not guaranteed by the State of Montana.
For purposes of federal estate tax, the value of an account generally will not be
treated as part of the taxable estate of an account owner who is not a designated
beneficiary.
No. Account owners can make annual gifts of up to $13,000 single and $26,000 joint to
a designated beneficiary for all accounts without incurring federal gift tax. For
contribution over the limit, you may treat the money (up $65,000) as having been made
ratably over a five-year period.
Yes. For more information call 1-800-888-2723 or visit mfesp.com to learn more.
An Account Owner may seek to withdraw funds at any time. The designated beneficiary of
an account has no authority to withdraw funds from the account unless (a) the
designated beneficiary is also the Account Owner or (b) the account was established
under the Uniform Gifts (or Transfers) to Minors Act and the designated beneficiary is
of the age of majority.
Many institutions require specific information from the Beneficiary in order to
properly credit the Beneficiary's account. Therefore, we do not mail checks directly to
Educational Institutions.
Federal tax law permits one tax-free rollover in any 12-month period from an account in
one qualified tuition program for a designated beneficiary to an account in another
qualified tuition program for the same designated beneficiary. To initiate a rollover
from your MFESP Account, please use the forms provided by the receiving institution. CD
redemptions prior to maturity may result in Bank-imposed penalties.
*See terms and conditions
*All remaining funds will require you to complete and submit an additional Distribution
Authorization Form at least 45 days prior to the date you require the funds.
Funds made payable to the account owner will generate a 1099Q in the account owner's
name and social security number. If the distribution is made to the beneficiary or UGMA accounts, a 1099Q will be issued to the
beneficiary.
Distributions used to pay qualified higher education expenses are exempt from federal
income tax, however the portion of your distribution that constitutes earnings will be
included in taxable income if it is not used to pay qualified higher education expenses
or rolled over to another qualified tuition program (i.e. another section 529 program)
in a qualified rollover. Please refer to the Disclosure Statement for more
information.
The earnings portion of your distribution will be subject to a 10% federal penalty if
it is nonqualified. Distributions are nonqualified if they are not:
• used to pay qualified higher education expenses.
• rolled over to another qualified tuition program in a qualified rollover.
• made on account of death or disability of the designated beneficiary.
• made on account of a scholarship received by the designated beneficiary.
* Please read the MFESP disclosure statement for complete details on nonqualified
distributions.
Montana residents that claimed a Montana income tax deduction based on contributions to
the program will be subject to a Montana recapture tax on nonqualified withdrawals.
Withdrawals made within three years of opening the account, as well as rollovers to
other qualified tuition programs are also considered nonqualified for state tax
purposes.
You can call a college savings advisor any Monday through Friday from 9 a.m. to 8 p.m.
Eastern time at 1.800.888.2723, or e-mail questions to montana@collegesavings.com.
Additional forms as well as the most recent disclosure statement can be found online at
http:// montana.collegesavings.com.
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AFCSP FAQ
What is the Arizona Family College Savings Program?
It's a tax-advantaged program created by the state of Arizona to encourage
families to save for their children's higher education. The program was established
as a qualified tuition program under Section 529 of the Internal Revenue Code. The
Arizona Commission for Postsecondary Education has contracted with College Savings Bank
to serve as a manager of the program.
What are the income tax advantages?
Your earnings grow tax free while you control the assets. When the time comes to use
the money for college, earnings distributed to pay qualified higher education expenses
are also 100% tax free.
Arizona residents may deduct from Arizona taxable income the amount of their
contributions up to $750 per year single/$1,500 per year married couples filing
jointly.
Is there a contribution limit?
Yes. A contribution may not be made if it would cause the sum of all 529 accounts for
the same designated beneficiary to exceed the lesser of the balance limit, currently
set at $340,000, or the cost in current dollars of the qualified higher
education expenses that the account owner reasonably anticipates the designated
beneficiary will incur.
Who can participate?
Any U.S. taxpayer, regardless of income, may establish a tax-favored college savings
account for anyone - including themselves.
Can others contribute to my child's account?
Yes. A person need not be an account owner to contribute to a child's account.
However, Arizona residents who make deductible contributions must establish their own
accounts (or jointly with spouse).
What is an eligible educational institution?
It is any institution eligible to participate in a student aid program administered by
the U.S. Department of Education. It includes virtually all accredited, public,
nonprofit and proprietary postsecondary educational institutions. To find out if a
specific institution is eligible, review the 2011/2012 Federal School Code database. If the institution has
been assigned a federal school code by the Department of Education, then it is
considered eligible under Section 529.
Does my child have to attend full time?
No. Funds can be used to pay for tuition, fees, textbooks, supplies and equipment that
are required for the designated beneficiary to attend an eligible institution. If the
student's enrollment qualifies for at least half-time, room and board expenses are
also eligible up to a specified level.
What happens when my child is ready to attend college?
The account owner must submit a Distribution Authorization Form.
What if my child receives a scholarship?
Funds up to the amount of a qualified scholarship can be returned to the account owner
without incurring the 10% federal tax penalty.
What if my child does not attend college?
The account owner may either close the account or change the beneficiary. If the
account is closed, the funds are subject to a nonqualified distribution penalty in
addition to tax reporting.
Qualified expenses include tuition, fees, books, supplies and equipment that are
required for enrollment or attendance of the designated beneficiary at an eligible
educational institution. If the student's enrollment qualifies as at least half time,
room and board expenses are also qualified expenses up to a specified level.
What is a nonqualified distribution?
Nonqualified distributions are withdrawals made for purposes other than for qualified
higher education expenses. Exceptions include withdrawals relating to the death or
permanent disability of the beneficiary.
What if I take a nonqualified withdrawal?
The account owner may withdraw funds at any time. The account balance with earnings
will be refunded. However, this refund is subject to a federal nonqualified
distribution penalty equal to 10% of earnings. CD early redemption penalties may also
apply.
Can I change the account owner or beneficiary?
Yes. The account owner and beneficiary may be changed to certain other family members.
There is no fee for the first change of owner or beneficiary. Thereafter, a $50 fee may
be imposed for each change.
Can I also contribute to a Coverdell Education Savings
Account?
If your income qualifies to make a Coverdell ESA contribution you may contribute to
both the AFCSP and a Coverdell ESA for the same beneficiary, in the same year. Amounts
may be withdrawn tax free from an ESA to make contributions to the AFCSP.
What about Hope and Lifetime Learning Credits?
Participation in the AFCSP does not disqualify you from claiming the Hope and Lifetime
Learning Credits if you so choose.
How does this program affect financial aid?
Program assets will be considered if the student applies for state or federally
sponsored financial aid or scholarships. If the account is owned by the parent, account
balances are generally included in the asset of the parents rather than the student.
Beginning July 1, 2009, section 529 accounts owned by or for the sole benefit of the
student (such as custodial accounts) also will be treated as assets of the parents for
federal financial aid calculations. (As a result of a peculiarity in the Higher
Education Act of 2005, until July 1, 2009, student owned section 529 accounts (such as
in a custodial account) will not be treated as the student's or parent's assets
for financial aid purposes.) Section 529 account distributions that are not included in
taxable income are not treated as student or parent income for purposes of federal
financial aid calculations. An account owner should check the applicable rules for
financial aid programs and scholarship programs before withdrawing funds to pay
qualified higher education expenses.
Under Arizona law, a student loan program, student grant program, or other financial
assistance program established or administered by the State of Arizona or a financial
assistance program administered by a college or university supported by the State of
Arizona must treat the balance in an account as an asset of the parent of the
designated beneficiary and not as a scholarship or grant or as an asset of the student
for determining a student's or parent's income, assets or financial need. However, this
rule does not apply if it is inconsistent with requirements of federal law or a
specific grant establishing a financial assistance program.
Is this program guaranteed by the state?
No. The program is not guaranteed by the State of Arizona.
How does this account affect estate tax?
For purposes of federal estate tax, the value of an account generally will not be
treated as part of the taxable estate of an account owner who is not a designated
beneficiary.
Must I pay gift tax on the contribution?
No. Account owners can make annual gifts of up to $13,000 single and $26,000 joint to
a designated beneficiary for all accounts without incurring federal gift tax. For
contribution over the limit, you may treat the money (up $65,000) as having been made
ratably over a five-year period.
Are there alternative investments available under the
program?
Yes, however the CollegeSure CD is only available from College Savings Bank.
Who may authorize a distribution?
An Account Owner may seek to withdraw funds at any time. The designated beneficiary of
an account has no authority to withdraw funds from the account unless (a) the
designated beneficiary is also the Account Owner or (b) the account was established
under the Uniform Gifts (or Transfers) to Minors Act and the designated beneficiary is
of the age of majority.
Many institutions require specific information from the Beneficiary in order to
properly credit the Beneficiary's account. Therefore, we do not mail checks directly to
Educational Institutions.
Federal tax law permits one tax-free rollover in any 12-month period from an account in
one qualified tuition program for a designated beneficiary to an account in another
qualified tuition program for the same designated beneficiary. To initiate a rollover
from your AFCSP Account, please use the forms provided by the receiving institution. CD
redemptions prior to maturity may result in Bank-imposed penalties.
*See terms and conditions
*All remaining funds will require you to complete and submit an additional Distribution
Authorization Form at least 45 days prior to the date you require the funds.
Funds made payable to the account owner will generate a 1099Q in the account owner's
name and social security number. If the distribution is made to the beneficiary or UGMA accounts, a 1099Q will be issued to the
beneficiary.
Distributions used to pay qualified higher education expenses are exempt from federal
income tax, however the portion of your distribution that constitutes earnings will be
included in taxable income if it is not used to pay qualified higher education expenses
or rolled over to another qualified tuition program (i.e. another section 529 program)
in a qualified rollover. Please refer to the Disclosure Statement for more
information.
The earnings portion of your distribution will be subject to a 10% federal penalty if
it is nonqualified. Distributions are nonqualified if they are not:
• used to pay qualified higher education expenses.
• rolled over to another qualified tuition program in a qualified rollover.
• made on account of death or disability of the designated beneficiary.
• made on account of a scholarship received by the designated beneficiary.
* Please read the AFCSP disclosure statement for complete details on nonqualified
distributions.
You can call a college savings advisor any Monday through Friday from 9 a.m. to 8 p.m.
Eastern time at 1.800.888.2723, or e-mail questions to arizona@collegesavings.com.
Additional forms as well as the most recent disclosure statement can be found online at
http://arizona.collegesavings.com.
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CollegeChoice CD FAQ
Capitalized terms not otherwise defined, have the same meaning as those terms defiined within the CollegeChoice CD Disclosure Statement.
What is the CollegeChoice CD 529 Savings Plan?
CollegeChoice CD 529 Savings Plan (CollegeChoice CD or the Plan) is a 529 plan offered by the Indiana Education Savings Authority (Authority) and managed by College Savings Bank (sometimes referred to as CSB or the Bank). CollegeChoice CD is designed to help individuals and families save for college in a tax-advantaged way and offers valuable advantages including tax-deferred growth, generous contribution limits and a variety of attractive FDIC-insured products from CSB. In addition, there are no income limits to open an Account or age limits to
be a Beneficiary.
How does CollegeChoice CD work?
When you enroll in CollegeChoice CD, you choose one or more CD Options that invest in one of three FDIC-insured products; the CollegeChoice CollegeSure® Certificate of Deposit (CD), CollegeChoice InvestorSure® CD or CollegeChoice Fixed Rate CDs, based upon your investing preferences and risk tolerance. Each CD product offers different terms and conditions, including rate of return and maturity. All of the contributions made to your Account grow tax-deferred and the distributions are federally and Indiana State tax-free if used for Qualified Expenses.*
How do I open an Account?
To open an Account, CollegeChoice CD must receive a completed Enrollment Form, which is a contract between you and the Authority establishing the obligations of each. You may enroll online or by mail. We cannot process the Enrollment Form if any of the required information is not provided. We have the sole discretion to determine whether an Enrollment Form is complete and accepted and whether the Account has been opened.
How many Accounts can I open?
You can open Accounts for as many Beneficiaries as you wish. You may also invest in any of the CD Options offered. Please keep in mind that each Account may have only one Account Owner and one Beneficiary and you must complete a new Enrollment Form for each different Beneficiary.
What are the fees associated with CollegeChoice CD?
CollegeChoice CD does not charge fees to Account Owners or Accounts for opening, maintaining, contributing to or taking withdrawals from an Account. We may charge fees or penalties for certain types of transactions, such as withdrawing CDs prior to maturity or changing Beneficiaries.
Can I open my Account through a financial advisor?
Yes. CollegeChoice CD has entered into agreements with various retail banks, broker/dealers and financial planners who can help you in making decisions regarding investments in CollegeChoice CD. If you use one of these financial professionals, you pay no commissions or fees. Any commissions are an expense of CSB and do not affect the amount of your contribution.
The Authority also administers the CollegeChoice Advisor 529 Savings Plan (CollegeChoice Advisor) that allows you to utilize the services of a financial advisor. Information about CollegeChoice Advisor is available at www.collegechoiceadvisor529.com or 1.866.485.9413.
Does CollegeChoice CD offer any tax benefits?
Yes. CollegeChoice CD offers both Indiana State and federal income tax benefits, starting with tax-deferred earnings and an Indiana State income tax credit for contributions made by Indiana taxpayers. The earnings portion of any distribution used to pay for Qualified Expenses are free from Indiana State and federal income tax.*
How does the State income tax credit work for CollegeChoice CD?
The State income tax credit is available only to Indiana taxpayers that made qualifying contributions to an Account in CollegeChoice CD. The tax credit is available to an individual filing a single return or a married couple filing a joint return. The amount of the credit is the lesser
of the following:
1. Twenty percent (20%) of the amount of the total contributions to the Plan during the taxable year by
the taxpayer;
2. One thousand dollars ($1,000); or
3. The amount of the taxpayer’s adjusted gross income tax liability for the taxable year reduced by the sum of all other credits allowed.
The State income tax credit is also available to contributors to the two other Qualified Tuition Programs offered by the Authority-CollegeChoice 529 Direct Savings Plan (CollegeChoice Direct) and CollegeChoice Advisor.
An Account Owner (who may or may not be the contributor) may be required to recapture the State income tax credit in certain circumstances.
Is my CollegeChoice CD Account guaranteed?
Although your CollegeChoice CD Account is not guaranteed, it is insured on a pass-through basis by the FDIC (Federal Deposit Insurance Corporation) up to the maximum amount set by federal law, currently $250,000. Under this insurance, your interest in the insurable balance of a CollegeSure CD, InvestorSure CD or Fixed Rate CD held pursuant to the Plan will be added to any other deposits you hold in the same right and capacity at the Bank and insured up to the maximum amount. Under applicable FDIC regulations, Accounts that have the same Account Owner will be deemed to be held in the same right and capacity and will be combined for purposes of the $250,000 limitation. Separate deposit insurance for Accounts with the same Account Owner and Beneficiary may also be available in certain limited circumstances. Please contact a Client Service Representative at 1.888.913.2885 for additional information.
Interest that accrues on a CollegeSure CD or Fixed Rate CD is also covered by FDIC deposit insurance, subject to these same limitations. The FDIC has taken the position, however, that payments similar to the Upside Payment on an InvestorSure CD are not subject to FDIC insurance until the CD matures.
How do I make contributions?
You may contribute to your Account in several ways including: checks, E-Check, direct deposit plan, payroll deduction (if your employer offers this service) or through a rollover distribution from another Qualified Tuition Program. Although there is a $250 minimum contribution before a CD will be issued, if you fund your Account with a direct deposit plan or by payroll deduction in amounts of at least $25, you can open your Account with an initial deposit of $25. CollegeChoice CD will hold your funds in an Accumulator Account until you reach $250.
Can I change my CD Options?
You may change your existing CD options one time per calendar year per Beneficiary. If you have multiple CD Options for a Beneficiary, all changes involving existing CD options for the calendar year for that Beneficiary must be requested on the same day. You may make additional contributions or enroll in new CD Options without limitation. Early Withdrawal Penalties may apply.
When can I enroll a newborn?
A newborn may be enrolled at any time. Keep in mind that you are required to submit the Beneficiary’s Social Security number on the Enrollment Form. You may also open an Account naming yourself as the Beneficiary in anticipation of the birth or adoption of a child.
Does my child have to attend college in Indiana?
No. You can use the assets in your Account toward the costs of nearly any public or private, two-year or four-year college in the U.S. or abroad, as long as the student is enrolled in a U.S.-accredited college, university or technical school that is eligible to participate in U.S. Department of Education student financial aid programs. In fact, many U.S. colleges and universities now have campuses or locations outside of the country, where money from your CollegeChoice CD Account can be used. Your Account can also be used for nearly any graduate school, medical school, or law school, among others, nationwide.
If I enroll in CollegeChoice CD, can I still apply for financial aid?
Yes. Participation in CollegeChoice CD does not limit a student’s receipt of merit-based financial aid, including academic or athletic scholarships. Like most investments, however, it may affect your ability to receive federal needs-based financial aid. Assets in a CollegeChoice CD Account are not considered when determining eligibility for Indiana financial aid programs.
What happens if my child receives a scholarship or grant?
There are several options you can choose from:
- Use assets in your Account to pay any tuition and required fees not covered by the scholarship or grant;
- Apply assets in your Account toward other Qualified Expenses such as certain room and board expenses
and books;
- Change the Beneficiary to another Member of the Family of the current Beneficiary;
- Keep any unused funds in your Account to pay for future Qualified Expenses, including graduate school; or
- Withdraw any unused funds up to the amount of the scholarship or grant without being subject to the 10% additional federal tax (Distribution Tax). Income taxes on earnings, however, will apply, any previously taken State income tax credit may have to be recaptured in certain circumstances and Early Withdrawal Penalties may apply.*
Can I change the Beneficiary of my Account?
Yes. You can transfer your Account to a Member of the Family of the Beneficiary without incurring taxes or penalties. Member of the Family currently includes: Child or Stepchild, Sibling, Stepsibling or Halfsibling, Parent or Stepparent, Grandparent, Grandchild, Niece or Nephew, Aunt or Uncle, First Cousin, Mother- or Father-in-law, Son- or Daughter-in-law, Brother- or Sister-in-law, Spouse of any individual listed (except first cousin).
What if my child does not go to college immediately after high school?
CollegeChoice CD does not require the child to attend college immediately after graduating from high school. There are no restrictions on when you can use your Account to pay for higher education expenses.
What if the Beneficiary or I move out of Indiana after I open an Account?
You can continue to contribute to your Account, and your Beneficiary can still use the Account to attend any Eligible Educational Institution. However, if you move out of State and no longer pay Indiana income tax, you will no longer be eligible to receive the Indiana State tax benefits.
What if I experience a financial hardship and need to withdraw the funds for a purpose other than college expenses?
You may request a distribution at any time. If the funds are not used for Qualified Expenses (a Non-Qualified Distribution), federal and applicable state income taxes, plus the Distribution Tax, will apply to any earnings portion of your distribution. You must also repay all or part of any Indiana income tax credit you had previously taken on contributions to your Account. In addition, Early Withdrawal Penalties may apply.*
What if I already have a 529 plan? Can I transfer my Account to CollegeChoice CD?
Yes. CollegeChoice CD will accept a rollover of any account with another Qualified Tuition Program into CollegeChoice CD. There may be many benefits to moving your Account into the Plan. Foremost among these could be the impact on your Indiana taxes. If you are an Indiana taxpayer and have an Account in another Qualified Tuition Program in another state, you are not eligible to take the Indiana income tax credit for contributions to your Account. (All Qualified Tuition Programs offer the same federal tax benefits.) Please note that the State income tax credit is not available to Indiana taxpayers that make rollover contributions from another Qualified Tuition Program into CollegeChoice CD.
Please contact a Client Service Representative at 1.888.913.2885 for details. You should also contact the sponsor of your current Qualified Tuition Program for additional details on rolling over your Account. Please be aware that not all states permit direct rollovers from Qualified Tuition Programs. In addition, there may be state income tax consequences (and in some cases state-imposed penalties) resulting from a rollover out of another state’s Qualified Tuition Program.
Do my contributions to CollegeChoice CD qualify as a gift under federal law?
Yes. The Code provides that payments to an Account are completed gifts for federal gift tax purposes and are eligible for the applicable annual exclusion from gift and generation skipping transfer taxes ($13,000 for a single individual or $26,000 for a married couple making a proper election). Under certain conditions, you can contribute up to $65,000 immediately ($130,000 for married couples) and apply the contribution against the annual exclusion equally over a five-year period. Please consult your tax advisor for more information.**
What are the risks involved in investing in CollegeChoice CD?
As with any investment, there are risks involved in investing in CollegeChoice CD. To learn about the risks, please read and carefully consider Plan Risk Factors within the full CollegeChoice CD 529 Savings Plan Disclosure.
Does CollegeChoice offer any other 529 plans?
Yes. CollegeChoice offers two other 529 plans-CollegeChoice Direct, for those investing for college on their own, and CollegeChoice Advisor, for those investing for college with the help of a financial advisor. Those plans have different investment options, charges, sales commissions, penalties and risks than CollegeChoice CD. They are marketed separately from CollegeChoice CD.
To obtain more information about CollegeChoice Direct and CollegeChoice Advisor, visit the CollegeChoice website at www.collegechoiceplan.com.
* Earnings on nonqualified 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 and early withdrawal penalties. The availability of tax or other benefits may be contingent on meeting other requirements.
Contributions to a CollegeChoice CD account are eligible for a state income tax credit of 20%, up to $1,000 credit per year. This credit may be subject to recapture from the account owner (not the contributor) in certain circumstances, such as a rollover to another state’s qualified tuition program or a non-qualified withdrawal. The credit does not apply to rollovers from another state’s qualified tuition program. See the Disclosure Statement for additional details.
** In the event the donor does not survive the five-year period, a pro-rated amount will revert back to the donor's taxable estate.
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