529 College Savings Plans
Three graduates walking
Choice. It may be the most important thing you can give your child when they´re ready for college. With a plan in place, your savings can grow and compound, giving your child more freedom to choose when it´s time.
 
With a 529 College Savings Plan, you can save for higher education for a named beneficiary on a tax-advantaged basis. These programs are established and maintained by individual states, and tuition programs may vary significantly from state to state. You can use a program offered by one state even if you don´t live there. Your UBS Financial Advisor can help you evaluate which state´s program makes sense for your situation. Here´s a summary of basic features:
  • 529 College Savings Plans offer federal tax advantages. Accounts are funded with after-tax contributions that generally grow tax-deferred. Distributions for qualified education expenses are received federal income tax-free.1 Many offer state income tax advantages for their residents and taxpayers
  • Distributions must be used for qualified higher education expenses (e.g., tuition, room and board, books, transportation and supplies for college, graduate school or professional school). If they are not used in this manner, they will be subject to a federal tax penalty and earnings will be treated as ordinary income for tax purposes
  • Almost anyone can establish a 529 College Savings Plan for a named beneficiary, including parents, grandparents, siblings, aunts, uncles or colleagues. Generally, there are no income or age restrictions. You may even establish a plan for your own education
  • You may be able to contribute as much as $65,000 per beneficiary in the first year of a five-year period (married couples filing jointly can contribute $130,000). No federal gift tax will result as long as you make no other gifts to the beneficiary in the same five-year period.2 Note: the annual contribution limit varies by state
  • You can designate and change account beneficiaries. However, a change in beneficiary must be a close family relative of the original beneficiary. With few exceptions, the named beneficiary has no rights to the funds in the accounts. You decide when withdrawals are taken and how the money is spent
  • You may be able to choose from several investment options offered by a particular state´s 529 College Savings Plan, which typically include an array of mutual funds offered by an investment company

UBS currently offers 29 state 529 programs. Your UBS Financial Advisor can help you decide whether a 529 plan is suitable for your education funding needs and help you choose the plan that's right for you.


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1Distributions from 529 College Savings Plans used to pay for qualified higher education expenses are not subject to federal income tax. However, existing tax laws are subject to change at any time.

2 The $65,000/$130,000 contribution is, in effect, treated as five separate $13,000/$26,000 annual exclusion gifts (one for the current year and then one in each of the next four years).

Neither UBS Financial Services Inc. nor any of its employees provide legal or tax advice. You must consult your legal and/or tax advisors regarding the tax implications of a 529 College Savings Plan and your personal circumstances. It is also important to note that the tax implications, as well as investment choices, of 529 College Savings Plans may vary significantly from state to state. Please note that most states offer their own 529 College Savings Plans that may provide advantages and benefits exclusively for their residents and taxpayers. You should carefully consider these factors before establishing and contributing to a 529 College Savings Plan.

The preceding information should not be relied upon as a specific tax-related recommendation and does not constitute a solicitation or recommendation to purchase a specific security. In addition, 529 College Savings Plans are sold via Program Description documents, which contain detailed information regarding the plan, risks, charges and tax treatment. You should read the Program Description carefully before investing.