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Frequently asked questions

GENERAL

What is CollegeChoice Advisor?
How does CollegeChoice Advisor work?
What qualifies as a higher education expense?
Who are the investment managers?
Who can open an account?
Who can be a beneficiary?
Do I retain control of the money?
How do I start?
How much can I invest?
Why do you need my personal information, including my Social Security number (or taxpayer identification number) and birth date?
Can I roll over money from another 529 plan to CollegeChoice Advisor?
What fees are associated with CollegeChoice Advisor?
Does my child have to attend college in Indiana?
Can I make an investment change in my account?
How can contributions be made to the account?
Are investments in the CollegeChoice Advisor 529 Savings Plan guaranteed?
What is Ugift® Give College Savings?
What is Upromise® rewards and how can it help me save for college?
What impact does a 529 plan have on eligibility for federal financial aid?
What is the impact of a CollegeChoice Advisor account on Indiana state financial aid?

TAXES

What federal tax benefits are available to me?
Are there any special tax benefits for Indiana residents?
What if I don't use the money in my account for a qualified higher education expense?

GENERAL


What is CollegeChoice Advisor? 
CollegeChoice Advisor is a Section 529 plan offered by the Indiana Education Savings Authority and managed by Upromise Investments, Inc. CollegeChoice Advisor 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, attractive investment options, and professional investment management. CollegeChoice Advisor is offered only through financial advisors.

How does CollegeChoice Advisor work? 
When you enroll in CollegeChoice Advisor you choose to invest in one or more of 18 different investment options, including Year of Enrollment Portfolios, Individual Portfolios, and a Savings Portfolio, based upon your investing preferences and risk tolerance. 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.*

What qualifies as a higher education expense?
 
Eligible expenses can include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs during any academic period the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student.

Who are the investment managers? 
CollegeChoice Advisor investment options are managed by: American Funds; BlackRock Institutional Trust Company, N.A.; BlackRock Advisors, Columbia Management Investment Advisors LLC; Pacific Investment Management Company LLC (PIMCO); Sallie Mae Bank; and T. Rowe Price.

Who can open an account? 
Any U.S. citizen or resident alien, 18 or older, or an entity that is organized in the U.S., with a Social Security number and a valid, permanent U.S. street address, can open a CollegeChoice Advisor account, regardless of income level. Parents, grandparents, other family, and friends can open an account for anyone they choose.** Any number of people can contribute to the same CollegeChoice Advisor account, but total contributions cannot exceed $298,770 per beneficiary.

Who can be a beneficiary? 
Any person of any age with a Social Security number can be named as the beneficiary of a CollegeChoice Advisor account. As account owner, you can select a child, adult or even yourself as beneficiary. If a beneficiary decides not to attend college, you can name another beneficiary who is a qualified member of the same family as the original beneficiary. Please see the Disclosure Statement for more information on who qualifies.

Do I retain control of the money?  
Yes. As account owner you choose the portfolios in which you invest, as well as the distribution of the funds.

How do I start?  
Contact your financial advisor, who will walk you through the enrollment process. Together, you will review investment options, plan specifics, and how CollegeChoice Advisor can fit into your overall financial plan. To open an account, you will complete an enrollment form and make an initial investment for the beneficiary of your choice.

How much can I invest?
 
You can establish an account with as little as $25 and make monthly investments of $25 or more. More than one person can contribute to the same account until total contributions reach $298,770. After that, the account can grow only through investment earnings.

Why do you need my personal information, including my Social Security number (or taxpayer identification number) and birth date? 
The Plan is required by federal law to obtain certain personal information, which will be used to verify the account owner's identity. If you don't provide the requested information, we will not be able to open the account. If we are unable to verify the account owner's identity, the Plan reserves the right to close the account or take other steps we deem reasonable. Your beneficiary's Social Security number is also required for tax-reporting purposes.

Can I roll over money from another 529 plan to CollegeChoice Advisor? 
Yes. You may perform a federal income tax-free rollover from another 529 plan into your CollegeChoice Advisor account for the same beneficiary once every 12 months. You may also perform a federal income tax-free rollover from another 529 plan into your CollegeChoice Advisor account at any time when you change the beneficiary to a qualifying family member of the current beneficiary. Please note that, effective January 1, 2010, rollovers from another state's qualified tuition program will no longer be eligible for the Indiana state income tax credit.

What fees are associated with CollegeChoice Advisor? 
The Plan charges a program management fee of 0.34% and an Administrative Fee of 0.10% (except for the Savings Portfolio). In addition, an Annual Account Maintenance Fee of $20 is charged to each account; this fee is waived if the combined account balance for the same account owner and beneficiary is equal to or greater than $25,000, or if the account owner or the beneficiary is an Indiana resident. These fees are in addition to the expense ratios of each investment option. Please refer to the Disclosure Statement for more information.

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, 2-year or 4-year college nationwide, 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 Advisor account can be used.

How can contributions be made to the account? 

  • Electronic funds transfer (opening contribution of $25) from your checking or savings account
  • Automatic investment plan*** (opening contribution of $25) with scheduled contributions in set amounts from your checking or savings account
  • Payroll direct deposit (of $25 or more) through participating employers
  • Check (made payable to CollegeChoice Advisor)
  • Rollover from another 529 plan
  • Rollover from an Education Savings Account or a qualified Series EE or Series I U.S. Savings Bond
  • Transfer from an UGMA/UTMA account
  • Ugift (minimum of $25)
  • Upromise rewards (minimum of $25)

Are investments in the CollegeChoice Advisor 529 Savings Plan guaranteed? 
Investment returns will vary depending upon the performance of the Portfolios you choose. Except to the extent of the FDIC insurance available for the Savings Portfolio, depending on market conditions, you could lose all or a portion of your money by investing in CollegeChoice Advisor. Account Owners assume all investment risks as well as responsibility for any federal and state tax consequences.****

Can I make an investment change in my account? 
Yes. You can change the direction of your future contributions at any time. Federal law permits you to move the assets in your CollegeChoice Advisor account to a different mix of investment options once per calendar year.

What is Ugift® - Give College Savings? 
Ugift is an innovative program that lets you leverage your social networks to invite family and friends to help you save for college.

What is Upromise® rewards and how can it help me save for college? 
Upromise rewards is a free service, with over 9 million members, that helps families earn money for college with hundreds of America's leading companies. Things you do every day can add to your college savings: shopping, eating out, filling your gas tank, buying groceries, traveling, and more. To learn more, click here.

When you link your Upromise account with your CollegeChoice Advisor account, your rewards earnings can be transferred automatically on a periodic basis, subject to a $25 minimum transfer amount. To link your accounts, log onto your Upromise account and follow the linking directions.

Upromise rewards is an optional online service offered by Upromise, Inc., is separate from the CollegeChoice Advisor 529 Savings Plan, and is not affiliated with the State of Indiana. Specific terms and conditions apply. Participating companies, contribution levels, terms and conditions subject to change without notice.

What impact does a 529 plan have on eligibility for federal financial aid?
529 plan assets are counted at different rates for the Expected Family Contribution (EFC) in the FAFSA formula. As of July 1, 2009, federal guidelines are as follows:

  • If the student is a dependent, a 529 plan account is considered as the parent's asset (if the account owner is the parent or the dependent student). As a result, it will generally be counted at a rate of only 3-6% of its value for the EFC.
  • If the student is not a dependent and is the account owner, the 529 plan account is treated as the student's asset and is generally factored into the EFC at the higher rate of 20%.
  • In other cases, the account does not count as an asset for federal financial aid purposes. (However, a student may have to report distributions received from the account as income for these purposes.)

Note: Financial aid programs offered by educational institutions and other non-federal sources may have their own guidelines for the treatment of 529 plan accounts. For complete information about financial aid eligibility, you should consult with a financial aid professional and/or the state or educational institution offering a particular financial aid program, since rules and regulations often change.

What is the impact of a CollegeChoice Advisor account on Indiana state financial aid?
If you and your beneficiary are Indiana residents, there is no impact on state financial aid. For more information on Indiana state financial aid, click here.

TAXES

What federal tax benefits are available to me? 
Earnings grow tax deferred and are free from federal income tax when used for qualified higher education expenses.* Qualified higher education expenses include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs during any academic period the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student.

Are there any special tax benefits for Indiana residents? 
Yes. If you are an Indiana taxpayer (resident or non-resident, married or individual), you are eligible for a state income tax credit of 20% of contributions to a CollegeChoice Advisor account, 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. Please note that, effective January 1, 2010, the Indiana state income tax credit will no longer apply to rollovers from another state's qualified tuition program or to transfers from the Upromise service into a CollegeChoice Advisor account. All other contributions will continue to be eligible for the tax credit to the extent previously allowable.

For more information on the tax credit, see Frequently Asked Questions on the Indiana Education Savings Authority website. (Note: You will be leaving this website.)

What if I don't use the money in my account for a qualified higher education expense? 
The earnings portion of a withdrawal not used for a beneficiary's qualified higher education expenses is subject to federal and state income taxes and a 10% federal penalty tax. Exceptions to a 10% federal penalty include a withdrawal made because the beneficiary:

  • Has died (if paid to a beneficiary of the beneficiary or the estate of the beneficiary)
  • Has become disabled
  • Received a scholarship, to the extent the withdrawal amount does not exceed the scholarship amount
  • Has enrolled in the United States Military Academy, the United States Naval Academy, the United States Air Force Academy, the United States Coast Guard Academy, or the United States Merchant Marine Academy, to the extent that the amount of the withdrawal does not exceed the costs of education attributable to such attendance

Any accumulated earnings that are withdrawn from your account must be included on the income tax return of the recipient for the tax year in which they are withdrawn. Contact your tax advisor about how to report a non-qualified withdrawal.

* 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.
** Section 529 defines a family member as: a son, daughter, stepson or stepdaughter, or a descendant of any such person; a brother, sister, stepbrother, or step sister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the father or mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; the spouse of the beneficiary or the spouse of any individual described above; or a first cousin of the beneficiary. Gift or generation-skipping transfer taxes may apply. Please consult with your tax advisor for further information.
*** An investment plan of regular investment cannot assure a profit or protect against a loss in a declining market.
**** Except for the Savings Portfolio, investments in CollegeChoice Advisor are not insured by the FDIC. FDIC insurance is provided for the Savings Portfolio only, which invests in an FDIC-insured omnibus savings account held in trust by the Authority at Sallie Mae Bank. Contributions to and earnings on the investments in the Savings Portfolio are insured by the FDIC on a pass-through basis to each account owner up to the maximum amount set by federal law -- currently $250,000 through December 31, 2013, and $100,000 thereafter. 

The amount of FDIC insurance provided to an account owner is based on the total of: (a) the value of an account owner's investment in the Savings Portfolio; and (b) the value of all other accounts held by the account owner at Sallie Mae Bank, as determined by Sallie Mae Bank and FDIC regulations.

© 2014 Indiana Education Savings Authority and Upromise Investments, Inc., Member FINRA. All Rights Reserved.

Not FDIC-Insured (except for the Savings Portfolio). No Bank, State or Federal Guarantee May Lose Value