Smart529

Features and Benefits


Tax Features

  • Earnings on your SMART529 account grow tax-deferred. 
  • Distributions for qualified higher education expenses (tuition, fees, room, board, books, supplies and equipment) are federal income tax free.  Earnings on non-qualified distributions are taxable as ordinary income and may also be subject to a 10% federal income tax penalty and may also have state tax implications.
  • Anyone can contribute up to $14,000 per year ($28,000 for married couples filing jointly) to a beneficiary's SMART529 account without gift-tax consequences.  Contributions may be accelerated up to $70,000 ($140,000 for married couples) once per 5-year period without incurring federal gift taxes.1

Account Owner Control

  • As the account owner you maintain complete control of your SMART529 account, including how contributions are invested and when withdrawals are made. 
  • There is no set deadline for using your account assets. The proceeds can be withdrawn by you at any time and at any age, subject to potential penalties for nonqualfiied withdrawals. 
  • You can change your beneficiary without a federal income tax liability, as long as the new beneficiary is a family member of the current beneficiary (an "eligible beneficiary"). Please see the Offering statement for the definition of eligible beneficiaries. 

Flexibility

  • Your SMART529 account can be used to cover qualified higher education expenses at thousands of eligible institutions throughout the country, including colleges, universities, and vocational schools. 
  • An account can be opened in anyone's name, including your own. 
  • If the beneficiary receives a scholarship, you can withdraw an amount equal to the scholarship from your account without a federal income tax penalty.  The money must be used to pay for qualified education expenses or the earnings will be subject to ordinary income tax, but not the 10% federal income tax penalty.
  • Tax-free transfers between investment options are allowed twice per calendar year.

Simple, Convenient Contributions

  • Anyone can contribute to a SMART529 account, including friends and relatives.  It's easy to make a gift contribution to a SMART529 account.
  • If available contribute using Payroll Direct Deposit — the easiest option!
  • Contribute as often as you like.  SMART529's Automatic Investment Program makes regular contributing directly from a checking or savings account simple.
  • There are no limits on contributions until your account balance exceeds $265,620.

Investment Options

  • SMART529 offers a wide range of investment options ranging from conservative to aggressive.  
  • Investing is convenient with asset allocation models based on the beneficiary's age (Age-Based Portfolios), or based on your risk tolerance and the time before college starts (Static Portfolios). 
  • The Age-Based and Static Portfolios are automatically rebalanced back to their original allocations on a quarterly basis.

1 Any additional gifts to the same beneficiary in that 5-year period would be subject to federal gift tax.  If the donor elects to treat the gift as being made over 5 years, and the donor dies prior to the end of that 5-year period, the portion of the gift allocable to the period after the donor's death will be included in the donor's estate. Estate tax treatment may differ by state. Please consult your tax advisor for more information.

MUN119781

Updated 05/23/2016