Kentucky Education Savings Plan Trust

Frequently Asked Questions - About 529 Plans

branding graphic



What is a 529 Plan?
529 refers to Section 529 of the Internal Revenue Code. By federal law, all 529 college savings plans must be state sponsored. A 529 college savings plan offers a tax-advantaged way to help families save for college. Residents of any state can invest in any state's 529 Plan, you do not have to be a resident of a particular state to invest in that state's plan. However, there may be tax advantages available only to state residents for any particular state-sponsored plan.

  • State-sponsored college savings plans. The value of these plans fluctuates with the markets. They can be used at eligible public and private colleges and trade schools nationally and some colleges abroad. Some state plans offer state tax advantages in addition to federal tax advantages. Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan. Qualified higher education expenses typically include: tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board; and certain expenses for "special needs" students.
  • State-sponsored prepaid plans. These plans are designed to allow parents to lock in today's tuition rates at eligible public and private colleges or universities. Qualified higher education expenses typically include tuition and fees at in-state colleges and universities. Some have provisions to include room and board.
  • Independent 529 Plan. A prepaid tuition program designed to provide you with an opportunity to prepay undergraduate tuition for a beneficiary at participating private colleges and universities throughout the United States. By participating in the Independent 529 Plan, you can pay for your beneficiary's tuition and certain fees today and lock in current tuition rates and a discount now for your beneficiary's future enrollment at a Participating Institution. The Independent 529 Plan offers the same federal tax advantages as the 529 savings plans originally specified by the Internal Revenue Code.

With all 529s - both savings, and prepaid programs - there is no income or age limit for participation. You can even open an account for yourself. Visit our interactive comparison tool for further details in comparing various types of plans.

How do 529 Plans vary?
529 Plans vary in a number of ways, including contribution limits to the account (defined by the states), fees to open and maintain an account, in-state tax treatments such as a state tax deduction, investment options offered, and the financial services company that manages the plan. There may also be other differences, such as special programs or benefits defined by the particular plan.

Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan.

How does a 529 Plan compare to other investment choices, such as custodial accounts?
To compare features of 529 plans and custodial accounts, use our comparison chart.

How do I compare college savings options?
Check out our interactive comparison tool. 

 Read more FAQs.
 

WE'RE HERE TO HELP

Have a question you don't see listed? Need clarification?

Call us toll-free at
1-877-KY TRUST
(1-877-598-7878)

We're available 8:00 am - 8:00 pm Eastern Time, Monday - Friday.


Don't forget you can set up an Automatic Contribution Plan (PDF, 157KB) or use Payroll Deduction (PDF, 45KB) for your contributions (if offered by your employer).

PDF files require the free Adobe Acrobat Reader. Get it here.

Access our glossary for the meanings of terms used throughout this site.

Tell a Friend
Let a friend know about the Kentucky Education Savings Plan Trust.
Webcast
CalculateCalculate Your
Savings Need
CompareCompare College
Savings Options
Questions?Questions?
Call 1-877-598-7878

The tax information contained on the Kentucky Education Savings Plan Trust (the Plan) Web site is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and services addressed in the Web site. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.

The Plan is administered by the Kentucky Higher Education Assistance Authority. TIAA-CREF Tuition Financing, Inc. (TFI) serves as Program Manager.

The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating information you consider important in making an investment choice, the ultimate decision is up to you. It is a good idea to revisit your investment strategy periodically as your goals, personal financial situation, and market conditions change.

Consider the investment objectives, risks, charges and expenses before investing in the Plan. Please call toll-free 1-877-KY TRUST (1-877-598-7878) for a Disclosure Booklet containing this information. Read it carefully.

Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan.

The Commonwealth of Kentucky, its agencies, TIAA-CREF Tuition Financing, Inc., Teachers Insurance and Annuity Association of America and its affiliates do not insure any account or guarantee its principal or investment return except for TIAA-CREF Life Insurance Company’s guarantee to the Kentucky Education Savings Plan under the funding agreement for the Guaranteed Option. Account value will fluctuate based upon a number of factors, including general market conditions.

The Plan Web site is for informational purposes only, and does not constitute an offer to sell or solicitation of an offer to buy any security that may be referenced on the site. Such offer or solicitation can be made only through the Disclosure Booklet.

The Plan Web site contains links to other Web sites. Neither the Plan Trust nor TFI and its affiliates are responsible for the content of those other Web sites. The accuracy of information on those sites cannot be confirmed.

C42489
© 2010 TIAA-CREF Tuition Financing Inc.