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Are contributions made pre-tax or after-tax to a Minnesota College Savings account?

Contributions to a Minnesota College Savings Plan account are always made after-tax regardless of the method in which an account owner is contributing to the account.

What are the tax advantages of the Plan?

When you contribute to the Minnesota College Savings Plan, any account earnings can grow federal and Minnesota income tax-deferred until withdrawn. If the account proceeds are used to pay for qualified higher education expenses any earnings will be free from federal and Minnesota income tax.

Is there a federal or state income tax deduction on contributions to an account?

There is no federal or state income tax deduction on contributions to a Minnesota College Savings Plan account.

How do I qualify for a Matching Grant?

As of July, 2011, the state of Minnesota discontinued the matching grant program for account contributions made after December 31, 2010. Beneficiaries who have received the matching grant in the past will continue to accrue earnings on their matching grant account, but no additional contributions will be made.

Where do I get information on Minnesota College Savings Plan performance?

Minnesota College Savings Plan performance for the seven investment options is available online. Go to investment performance.

Do I have to use my account funds for a Minnesota college or university?

No. The money in your account may be used at any eligible educational institution in the United States and some accredited foreign schools. This includes public and private colleges and universities, graduate and post-graduate schools, community colleges, and certain proprietary and vocational schools. Contact the school to determine if it qualifies as an eligible educational institution.

What if my child doesn't go to college?

You can transfer all or a portion of the funds in the account to another eligible beneficiary, you can use the funds in the future if the beneficiary decides to go to college at a later time, you can change the account beneficiary to another family member. You can also take a non-qualified withdrawal from the account at any time. Taxes apply to nonqualified withdrawals.

My broker showed me another state's 529 plan. What are the main advantages of using Minnesota College Savings Plan?

The Minnesota College Savings Plan offers six investment options. When comparing other state's 529 college savings plan, compare any additional benefit your state may offer, Plan fees and performance. Visit savingforcollege.com for a state 529 plan comparison chart. The Minnesota College Savings Plan is considered a direct sold plan which keeps the fees low so more of your funds go toward your college savings goals and less toward administration and broker commissions.


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About 529 Plans

  • What is a 529 Plan?

    Just as a 401(k) plan is for retirement savings, a 529 college savings plan is for college savings. 529 refers to Section 529 of the Internal Revenue Code. By federal law, all 529 college savings plans must be state sponsored. 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. There are several types of 529 Plans, including state-sponsored college savings plans and state-sponsored prepaid plans. 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 to compare features and benefits of these 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 treatment such as a state tax deduction, investment options offered, and the financial services company managing the plan. There may 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 offering favorable state income tax or other benefits 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 and Coverdell Education Savings Accounts (ESA)?

    To compare features of 529 plans and custodial accounts, use our interactive comparison tool.
  • About TIAA-CREF

    TIAA-CREF is a full-service financial services group of companies dedicated to helping those in the academic, medical, cultural, and research fields. Our commitment for over 90 years is to serving the financial best interests of those who serve others.
  • About the Minnesota 529 College Savings Plan.

    The Minnesota College Savings Plan provides tax-advantaged ways for families to save for higher education tuition and other expenses. Started in September, 2001, the Minnesota College Savings Plan has helped thousands of families save for their loved one's future college expenses. The state of Minnesota created the Plan to encourage individuals to save for postsecondary education. The Minnesota Office of Higher Education is responsible for implementing and administering the Plan. The Minnesota State Board of Investment is responsible for investing money deposited in accounts in the Plan. TIAA-CREF, Tuition Financing, Inc. has been selected by the Minnesota Office of Higher Education and the Minnesota State Board of Investment as the Plan Manager for the Minnesota College Savings Plan.

Tax Considerations

  • What are the federal estate and gift tax benefits?

    Contributions to the Minnesota College Savings Plan may help you reduce the taxable value of your estate. Contributions to the Plan, together with all other gifts from the account owner to the beneficiary, may qualify for an annual federal gift tax exclusion of $14,000 per donor ($28,000 for married contributors), per beneficiary for 2013. If an account owner's contribution to a Plan account for a beneficiary in a single year exceeds $14,000 ($28,000 for married contributors), the account owner may elect to treat up to $70,000 of the contributions, or $140,000 for joint filers, as having been made over a period of up to five years for federal gift tax exclusion. Consult your tax advisor.
  • Are contributions to the Minnesota College Savings Plan federal tax deductible?

    No, contributions to the Minnesota College Savings Plan or any 529 plan are not deductible for federal income tax purposes.
  • How are withdrawals for qualified higher education expenses taxed?

    If you are taking a withdrawal to pay for qualified higher education expenses of the beneficiary, there will be no federal or Minnesota state income tax. Use the Withdrawal Form (PDF).
  • How are withdrawals for non-qualified expenses taxed?

    If funds are withdrawn for a purpose other than to pay for qualified higher education expenses (except in the event of a beneficiary's death, disability, scholarship or attendance at a military academy), or they are treated as withdrawn (for example, if an ineligible beneficiary is named), there will be a 10% additional federal tax on the earnings portion of the distribution.
  • What is the Generation Skipping Tax?

    Transfer of funds or a change in beneficiary is subject to the Generation Skipping Tax (GST) if the new beneficiary is two or more generations below the prior beneficiary. If the transfer is subject to GST, a tax is imposed on the prior beneficiary. Account owners should consult their own tax advisors for guidance when considering a change of beneficiary or a transfer to another account.

Investment Options and Performance

  • Can I select the investments for my account?

    You may choose among the Plan's seven investment options, but not the underlying mutual funds or other investment vehicles to which funds in the investment option may be allocated. Under federal law, an account owner may not have direct or indirect control over the investments in a 529 Plan. See the list of underlying funds.
  • Can I see a list of the underlying funds?

    Yes, go to the investment options page and click on the Underlying Funds link for a list and description of the underlying funds.
  • Can I change my investment selection?

    Yes. Each time you make a contribution you may select any one of the Plan's seven investment options. Once invested in a particular investment option, contributions and any earnings may be transferred to other investment options once per calendar year or upon a transfer of funds to a Plan account for a different eligible beneficiary (see the Plan Disclosure Booklet. Use the Rebalance Form to change your investment selection.

Opening an Account, Contributions and Fees

  • How do I open an account?

    You can Enroll Online and submit your initial contribution electronically from your bank account or establish an Automatic Contribution Plan. You can also download enrollment materials, or you can request an enrollment kit to have enrollment materials mailed to your address. Allow five to seven days for delivery.
  • Are there any fees associated with opening a Minnesota College Savings Plan account?

    With the Minnesota College Savings Plan, there are no sales charges, start-up or maintenance fees. The Plan's only fee is the total annual asset management fee which ranges from 0.51% to 0.61% (around 1/2 percent) depending on the investment option. The Guaranteed Option is offered without the total annual asset management fee. Please note the state of Minnesota reserves the right to change the current fee and impose new or additional fees, expenses, charges or penalties in the future. For details on the management fee, please see fees and expenses.
  • What is the maximum I can contribute to an account?

    There is no annual limit on the amount you may contribute. However, there is an overall maximum account balance limit of $235,000 which applies to all accounts opened for a beneficiary. An account owner may contribute to a beneficiary's account if, at the time of the contribution, the total balance of all accounts for that beneficiary does not exceed $235,000. Accounts that have reached the maximum account balance limit may continue to accrue earnings.
  • Can I take a distribution from both a Minnesota College Savings Plan account and Coverdell Educations Savings Account to pay for expenses in the same year?

    Yes. However, you must apply the distributions to different eligible expenses in order to obtain the favorable tax treatment. See IRS Publication 970 for more detail, or consult your tax advisor.
  • How do I contribute to the Minnesota College Savings Plan?

    You can open an account by check, through the automatic contribution plan, by payroll deduction, by electronic funds transfer (including electronic purchase option), or through a transfer of funds between accounts or a rollover. The minimum initial contribution is $25, with at least $25 to each investment option chosen. If contributions are made via payroll deduction, the $25 initial contribution minimum is waived and the minimum contribution is decreased to $15 for both initial and subsequent contributions. Each account can have only one account owner and one beneficiary. However, each beneficiary may have more than one account and, you may open separate accounts for as many different beneficiaries as you wish. To set up an automatic contribution plan, log in to your account or use the Electronic Banking Form. To set up payroll deduction, use the Payroll Deduction Form (PDF).
  • How do I keep track of my account?

    You have online access to your account information 24 hours a day, or you can call and speak to one of our college-savings specialists at 1-877-338-4646, Monday through Friday, 7 a.m. to 7 p.m. CT. You'll receive quarterly and annual statements showing account activity. A separate confirmation statement will also be mailed, listing every transaction made to your account. (Quarterly statements will be provided for periodic payment plans, such as payroll deduction.) Log in to your account.
  • How do I sign up for e-Delivery?

    If you'd like to enroll to receive your account statements online, click here, log into your account, and click on "Change Account Statement Delivery."

Plan Requirements, Using the Funds

  • How do I know which educational institutions are eligible?

    Contact your school to determine if it qualifies as an eligible educational institution or use the Federal School Code Search on the Free Application for Federal Student Aid (FAFSA) website.
  • What are the qualified higher education expenses?

    Qualified higher education expenses include tuition, fees, and the cost of books, supplies, and equipment required for the enrollment and attendance of the beneficiary at an eligible educational institution, and certain room and board expenses. Qualified higher education expenses also include certain additional enrollment and attendant costs of a special needs beneficiary in connection with the beneficiary's enrollment or attendance at an eligible institution. For this purpose, an eligible educational institution generally includes accredited postsecondary educational institutions offering credit toward a bachelor's degree, an associate's degree, a graduate-level degree or professional degree, or another recognized postsecondary credential.
  • How do I withdraw money to pay for college?

    When you want to withdraw money (take a distribution) from your account, you may request a withdrawal online and the funds will be sent, via Automated Clearing House*, to your bank account, as long as your banking information has been on file with your account for at least 30 days and your address has not changed within the last 30 days. Alternatively, you may request a withdrawal by using the Withdrawal Form. This form can be used for withdrawals for qualified higher education expenses of your beneficiary, non-qualified withdrawals, or withdrawals due to death, disability or scholarship. Note: Non-qualified withdrawals will be subject to federal and Minnesota income taxes and a 10% additional federal tax. Keep your receipts.

    *Automated Clearing House payments may take several days to be deposited into your bank account.
  • If I move out of Minnesota, what will happen to my account?

    If you move to another state, you can still keep your money invested in your Minnesota College Savings Plan account. You can also continue contributing money to your account. 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 offering favorable state income tax or other benefits only available if you invest in that state's 529 plan.
  • What room and board expenses are covered?

    The beneficiary must be enrolled at least half-time at an eligible post-secondary institution which leads to a recognized educational credential in order for room and board to be considered a qualified higher education expense. For students living at home with parents, as well as students living in non-campus housing, the eligible educational institution's "cost of attendance" allowance for purposes of determining eligibility for federal education assistance for that year will be the room and board amount treated as a qualified higher education expense. For students living in housing owned or operated by the eligible educational institution where the actual invoice amount charged by the eligible educational institution for room and board is higher than the institution's "cost of attendance," the actual invoice amount may be treated as qualified room and board costs.
  • Can a HOPE/American Opportunity Tax Credit or Lifetime Learning Tax Credit for qualified tuition and other related expenses be taken after using Plan funds to pay for qualified higher education expenses?

    A student or the student's parent may claim a HOPE/American Opportunity Tax Credit or Lifetime Learning Tax Credit for certain qualified education expenses, provided eligibility requirements for the credit are met. You should consult the current version of IRS Publication 970, Tax Benefits for Education, for information about this and other tax incentives available for educational expenses.
  • Can I use the money at schools outside the United States?

    Yes, 529 Plan assets can be used at some accredited foreign schools. Contact the school to determine if it qualifies as an eligible educational institution.
  • What if my child decides not to attend college?

    If the beneficiary of an account does not attend college, the account owner may name another beneficiary for the account. The new account beneficiary must be a member of the family of the beneficiary that is being replaced (See definition of 'member of the family'). Otherwise, if the funds are withdrawn for a purpose other than to pay for qualified higher education expenses (except in the event of a beneficiary's death, disability, scholarship or attendance at a military academy), or they are treated as withdrawn (for example if an ineligible beneficiary is named) there will be a 10% additional federal tax on the earnings. See the Disclosure Booklet for details.
  • What is a non-qualified withdrawal?

    A non-qualified withdrawal is any withdrawal that does not meet the requirements of : (1) a qualified withdrawal; (2) a taxable withdrawal; or (3) a rollover. The earnings portion of a non-qualified withdrawal is subject to federal income taxation, and the 10% additional federal tax. See the Disclosure Booklet for details.
  • What happens in the event of death or disability of the beneficiary?

    If the distribution is made due to the death or disability of the beneficiary, the earnings portion of such a withdrawal is subject to federal income tax but is not subject to a 10% additional federal tax.
  • Will participation in the Minnesota College Savings Plan affect my beneficiary's eligibility for financial aid?

    The treatment of investments in a 529 savings plan varies by school. Assets are typically treated as the account holder's and not the student's. Any investments, including those in 529 accounts, may affect the student's eligibility to get financial aid based on need. You should check with the schools you are considering regarding this issue. Additional information on the affect of savings on financial aid is available from the Minnesota Office of Higher Education.
  • What if my child gets a full or partial scholarship?

    If your beneficiary receives a scholarship covering the cost of qualified expenses, you can withdraw the funds from your account up to the amount of the scholarship. The earnings portion of the withdrawal due to scholarship will be taxable but there will not be an additional 10% federal tax on the earnings portion.
  • Is paying off a student loan a qualified higher education expense?

    No. Repayment of student loans is not considered a qualified higher education expense.

Beneficiaries

  • Who can be the beneficiary of an account?

    Any U.S. citizen or resident alien, including the account holder, can be the beneficiary. The beneficiary must have a valid Social Security Number or federal Taxpayer Identification Number.
  • Can I change the beneficiary of my account?

    Yes, you can change your beneficiary at any time, or transfer a portion of your investment to a different eligible beneficiary. The new beneficiary must be a member of the previous beneficiary's family, as described in the Minnesota College Savings Plan Disclosure Booklet. Use the Account Transfer Form.
  • Who qualifies as member of the family?

    A "member of the family" of a beneficiary is a person related to that beneficiary as follows: (i) a son or daughter, or a descendant of either; (ii) a stepson or stepdaughter; (iii) a brother, sister, stepbrother or stepsister; (iv) the father or mother, or an ancestor of either; (v) a stepfather or stepmother; (vi) a son or daughter of a brother or sister; (vii) a brother or sister of the father or mother; (viii) a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; (ix) the spouse of the beneficiary or of any of the other foregoing individuals; or (x) a first cousin of the beneficiary. For this purpose, a child includes a legally adopted child and a brother or sister includes a half-brother or half-sister.

Rollovers and Transfers

  • Can I transfer assets in a Coverdell Education Savings Account to the Minnesota College Savings Plan?

    Yes you can transfer assets from a Coverdell Education Savings Account to a 529 college savings plan account. Check with your current provider of any fees they may charge to transfer the assets, if any. Discuss the transfer with your financial advisor to determine if there are any tax or other consequences. To complete a transfer, use the Rollover Form.
  • Can I roll over funds from another 529 plan into the Minnesota College Savings Plan?

    You are permitted to transfer funds from another 529 college savings plan to an account in the Minnesota College Savings Plan for the same beneficiary once within a 12-month period without incurring federal income tax. The 529 college savings plan from which you are transferring funds may have different features, costs and surrender charges. You should consult with your tax advisor or the other 529 college savings plan. State and local taxes may apply. To complete a rollover, use the Rollover Form.
  • Can assets from an UGMA/UTMA account be transferred to the Minnesota College Savings Plan?

    Yes, though transferring UGMA/UTMA assets into a 529 plan account may result in a tax liability. You should discuss this with your financial advisor and tax advisor.

Still have questions?
See the Disclosure Booklet for more details on Plan requirements.

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