Frequently Asked Questions

About 529 Plans

Q:
What if my child decides not to attend college?

If the beneficiary of an account does not attend college, the account owner may transfer the account to another eligible family member. See definition of eligible family member. In addition, the funds can be withdrawn for other purposes, and will be treated as an unqualified expense. For more information about potential tax penalties, click here.

Q:
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, or 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.

Q:
How does a 529 plan compare to other college savings options?

Account Management

Q:
What is the status of my contribution?

To view your transaction history, log in to your account, choose a beneficiary, and scroll down to the transition history section. You can always speak to one of our college savings specialists at 1-877-338-4646, Monday through Friday, 7 a.m. to 8 p.m. CT.

Q:
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. To review the current total annual asset-based fees, which are comprised of the underlying investment expenses for each Investment Option, the Plan Manager fee, and state administration fee, please see fees and expenses.

Q:
Do I have to use my account at 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 abroad. This includes public and private colleges and universities, graduate schools, community colleges, and certain proprietary and vocational schools.

In addition, up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used for tuition expenses at a public, private or religious elementary, middle, or high school.

Please see the state tax treatment of withdrawals used for K-12 school tuition here.

Q:
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 $425,000 which applies to all accounts opened for a beneficiary. Accounts that have reached the maximum account balance limit may continue to accrue earnings.

Q:
How do I contribute to the Minnesota College Savings Plan?

You can contribute to an account by establishing a recurring contribution, payroll direct deposit, electronic funds transfer, or a rollover from another 529 College Savings Program Account, Coverdell Education Savings Account or qualified U.S. savings bond. For more information, click here.

Q:
How can I change bank info, change my address, or other account information?

To update your account information, log in select "Profile & Documents" and select the appropriate option from the left hand navigation.

Q:
Can my beneficiary have more than one Minnesota College Savings Plan account?

Yes, a beneficiary may have more than one Minnesota College Savings Plan account. However, an account owner can have only one account for each beneficiary.

For example, a beneficiary may have an account owned by their parent, and/or their grandparent, and/or their aunt, etc. There is an overall maximum account balance limit of $425,000 which applies to all accounts opened for a beneficiary.

Q:
Can I change the beneficiary of my account?

Yes, please click here to learn more.

Q:
Do I need an account for each child?

Yes, having an account for each beneficiary is recommended. A Minnesota College Savings Plan only takes $25 dollars and 15 minutes to open.

Q:
Can I rollover funds from another 529 plan into a Minnesota College Savings Plan account?

Yes, you can transfer funds from another 529 college savings plan to an account in Minnesota College Savings Plan for the same beneficiary once within a 12-month period without incurring federal income tax. You should consult your tax advisor or the other 529 college savings plan. State and local taxes may apply. How to Manage an Incoming Rollover from another 529 Account.

Q:
Can I deposit a refund for dropped courses back into the Minnesota College Savings Plan?

Yes - funds may be redeposited to your 529 plan within 60 days without penalty should a student need to withdraw from a class. The recontributed amount cannot exceed the amount of the refund.

Financial Aid/Scholarships

Q:
Will saving with a 529 Plan affect my eligibility for financial aid?

Money set aside in a 529 plan actually has less of an impact on financial aid than some other savings methods. That is because 529 assets are typically treated as the account holder's (i.e. the parent's) and not the student's. Every school has a formula for how they calculate the "Expected Family Contribution" (EFC). In general, in EFC calculations, parent assets are assessed at approximately 5% whereas student assets are generally assessed at 20%. Meaning only 5% of parent assets are assumed to go towards how much a family should pay for college, yet a full 20% of the child's assets are assumed to go towards college. Bottom line, 529 savings have less of an impact when figuring financial aid, than assets owned by the child (for example a custodial (UGMA/UTMA) account).

For more information, please click here.

Q:
What if my child gets a full or partial scholarship?

If the beneficiary receives a scholarship that covers the cost of qualified expenses, you can withdraw the funds from your account up to the amount of the scholarship without incurring the 10% federal tax penalty on the earnings portion. However, the earnings portion will be subject to federal and state income tax. If the amount withdrawn exceeds the amount of the scholarship, the earnings portion of the amount withdrawn will be subject to the additional 10% federal tax penalty. Please consult with a qualified tax advisor or consultant.

Investments

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

Minnesota College Savings Plan performance for the eleven investment options is available online. Please click here for more information.

Q:
What are my investment choices?

The Minnesota College Savings Plan offers you a choice of eleven investment options. These options vary in their investment strategy and degree of risk, allowing you to select an option or combination of options that may fit your needs. To see the list of Investment Options, brief descriptions and associated fees and expenses, visit Investment Options. For more information on the risks involved in investing in such Investment Options, and the type of investor for whom each investment option may be appropriate, read the plan description.

Q:
Can I select the investments for my account?

You may choose among the Plan's eleven investment options. Click here for more information about investment options.

Q:
Can I change my investment selection?

Yes. Each time you make a contribution you may select any one of the Plan's eleven investment options. Once invested in a particular investment option, contributions and any earnings may be transferred to other investment options only twice per calendar year or upon a transfer of funds to a Plan account for a different eligible beneficiary.

Online Access

Q:
I forgot my username?

If you have forgotten your Username, please click here.

Q:
I forgot my password?

If you have forgotten your password, please tell us your user name and registered e-mail address here.

Q:
How do I change my password?

To change your password, log in here, choose a beneficiary and select "View profile and documents,"then "Password & Security Features" from the left hand navigation.

Q:
I forgot BOTH my username and password?

If you have forgotten both your Username and password, first retrieve your Username by clicking here. Once you have received your Username, log in, and you can log in with a temporary password.

Q:
How do I unlock my account?

If your account has been locked, please contact client services at 1-877-338-4646 from 7:00 AM to 8:00 PM CT Monday to Friday, excluding holidays. They can assist you with unlocking your account. We apologize for the inconvenience.

Q:
How do I sign up for e-Delivery?

To sign up for e-delivery, log in here, choose a beneficiary and select "View profile and documents", then "Delivery Preferences" from the left hand navigation.

Taxes

Q:
Is there a Minnesota income tax deduction?

Yes, a Minnesota taxpayer may be eligible for either a deduction or a tax credit on contributions during a taxable year.

Net contributions by a taxpayer who does not claim the Minnesota tax credit for contributions are deductible for Minnesota income tax purposes each year. Tax deductions up to $3,000 for joint income tax return filers and $1,500 for all other filers.

Incoming rollovers from another 529 account are not eligible for the tax deduction or credit. For more information about tax advantages, please click here.

Q:
Are contributions to a Minnesota College Savings Plan account federal tax deductible?

No, contributions to Minnesota College Savings Plan or any 529 plan are not deductible for federal income tax purposes.

Q:
What are the federal and state tax advantages?

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

Q:
What are the federal estate and gift tax benefits?

Contributions to a Minnesota College Savings Plan account may help reduce the taxable value of your estate. For more information about gifting, please click here.  

Q:
How are withdrawals for non-qualified expenses taxed?

The earnings portion of a non-qualified withdrawal is subject to federal income taxation and the additional 10% federal tax. See the plan description for details.

Q:
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 income tax. Find out how to make a withdrawal.

Q:
Can a HOPE/American Opportunity Credit of Lifetime Learning Credit for qualified tuition and other related expenses still be taken?

A student or the student’s parent may claim a Hope Scholarship Credit or Lifetime Learning Credit for certain qualified education expenses, provided that eligibility requirements for the credit are met. However, you cannot claim a credit based on the same expenses used to figure the tax-free portion of a distribution (withdrawal) from a 529 plan. You should consult the current version of IRS Publication 970, Tax Benefits for Education, for information about other tax incentives available for educational expenses.

Withdrawals

Q:
How do I withdraw money to pay for college?

You may request a withdrawal via your account online. Select the beneficiary you would like to withdraw the money for, click “Make a Withdrawal” on the left hand navigation and follow the directions. Alternatively, you may request a withdrawal by using the Withdrawal Form.  

Q:
What is the status of my withdrawal?

To view your transaction history, log in to your account, choose a beneficiary, and scroll down to the transaction history section. You can always speak to one of our college savings specialists at 1-877-338-4646, Monday through Friday, 7 a.m. to 8 p.m. CT.

Q:
What are qualified education expenses?

Qualified higher education expenses include tuition, certain room and board expenses, fees, and the cost of books, supplies, and equipment required for the enrollment and attendance of the Beneficiary at an eligible educational institution. Computers and related technology such as internet access fees, software or printers are also qualified when used primarily by the beneficiary when enrolled at an eligible educational institution.

Additional expenses include certain enrollment and attendance costs of a special needs beneficiary at an eligible institution. For more information about qualified withdrawals, click here. Qualified education expenses also include tuition in connection with enrollment or attendance at a K-12 public, private or religious school, up to a maximum of $10,000 per year per Beneficiary from all Section 529 plans. State tax treatment of withdrawals for K-12 tuition expense is determined by the state where you file state income tax. If you are not a Minnesota taxpayer, please consult with a tax advisor.

Q:
What room and board expenses are covered?

The beneficiary must be enrolled at least half time at an eligible post-secondary institution. For students living in housing owned and operated by the institution, the full invoice amount will be used to determine the qualified room and board expenses. For those students living at home or in off-campus housing, the "cost of attendance" allowance for the individual institution will be used for the qualified room and board expenses.

Q:
Are computers, tablets and associated costs considered qualified higher education expenses?

Computers and related technology such as internet access fees, software or printers are also qualified education expenses. The student must be the primary user of the equipment.

Q:
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 website.

Q:
Is paying off a student loan considered a qualified higher education expense?

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

Q:
What is a non-qualified withdrawal?

A non-qualified withdrawal is any withdrawal that does not meet the requirements of being: (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 additional 10% federal tax. See the Plan Information and Details section for more info.

Q:
Under what circumstances are taxable withdrawals not subject to the 10% penalty?

Taxable withdrawals that are not subject to the 10% penalty are withdrawals due to the beneficiary's death, the permanent disability of the beneficiary, the beneficiary's receipt of a scholarship award or certain other tax-free amounts, or the beneficiary's attendance at a military academy. A taxable withdrawal will be subject to applicable federal income tax on earnings, if any, but will not be subject to the 10% additional federal tax on earnings (the "Additional Tax").


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