Investment Options

The Franklin Templeton 529 College Savings Plan offers three different types of investment options: age-based asset allocations, objective-based asset allocations and individual portfolios.

The Age-Based Asset Allocations

As the beneficiary ages, the Age-Based Asset Allocations will automatically reallocate a percentage of assets out of equity-based funds (primarily stocks) into more conservative, income-generating funds (such as bond and money-market funds).

Asset Classes and Target Percentage Investments
(Actual % investments may vary +/- 5% from the target)

Domestic Equity     International Equity     Income     Cash

Franklin Conservative Allocation 529 Portfolio

Franklin Moderate Allocation 529 Portfolio

Franklin Growth Allocation 529 Portfolio

Objective-Based Asset Allocations

These portfolios allow you to invest according to the amount of investment risk you are comfortable taking and the potential return characteristics you prefer. Choose among 5 portfolios.

Franklin Founding Funds 529 Portfolio

This portfolio invests in three value-oriented underlying funds — each a cornerstone fund with over a 60-year track record — to create an investment portfolio offering diversification across multiple asset classes and the potential for attractive long-term results.
Franklin Income Fund (33.3%)
Franklin Mutual Shares Fund (33.3%)
Templeton Growth Fund (33.3%)

 

Franklin Corefolio® 529 Portfolio1

This portfolio invests in a combination of four underlying equity funds with distinct investment strategies. The allocation provides significant diversification across multiple industries, which may help reduce overall risk, and offers potential for long-term growth.
Franklin Growth Opportunities Fund (25.0%)
Franklin Growth Fund (25.0%)
Templeton Growth Fund (25.0%)
Franklin Mutual Shares Fund (25.0%)

 

Franklin Growth Allocation 529 Portfolio

This growth allocation is designed for investors with a longer investment time horizon and/or a higher risk tolerance.
International Equity (30.0%)
Domestic Equity (70.0%)

 

Franklin Growth & Income Allocation 529 Portfolio

This moderate allocation is designed for investors with a longer-to-medium investment time horizon and/or a moderate risk tolerance.
Domestic Equity (35.0%)
International Equity (15.0%)
Income (40.0%)
Cash (10.0%)

 

Franklin Income Allocation 529 Portfolio

This conservative allocation is designed for investors with a shorter-to-medium investment time horizon and/or a lower risk tolerance.
Income (80.0%)
Cash (20.0%)

Individual Portfolios

Individual portfolios are available to create an asset allocation mix to suit your personal college investing needs.

Plan contributors may choose among as many of the following portfolios as they like, as long as the total equals 100% of the plan assets:2

Global

  • Templeton Growth 529 Portfolio
  • Franklin Mutual Global Discovery 529 Portfolio

Growth

  • Franklin Growth 529 Portfolio
  • Franklin Small-Mid Cap Growth 529 Portfolio
  • S&P 500 Index 529 Portfolio

Value

  • Franklin Mutual Shares 529 Portfolio

Income

  • Templeton Global Bond 529 Portfolio

Hybrid

  • Franklin Income 529 Portfolio

Principal Preservation

  • Franklin U.S. Government Money 529 Portfolio

The Franklin U.S. Government Money 529 Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency and it is possible to lose money by investing in the portfolio.

Coverdell Education Savings

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  • Investment earnings accumulate tax free, and withdrawals are tax free as long as they’re used to pay for qualified education expenses (such as tuition, fees, books as well as certain room and board expenses) at eligible educational institutions. Contributions are not tax deductible.

  • You may contribute up to $2,000 annually to a Franklin Templeton Coverdell ESA on behalf of a designated beneficiary under the age of 18. Contributions cannot be made after a child turns 18 (except in the case of a Special Needs Beneficiary).

    A Special Needs Beneficiary is an individual who, because of a physical, mental or emotional condition (including a learning disability), requires additional time to complete his or her education.

    You can contribute to both a Coverdell ESA and a 529 college savings plan on behalf of the same beneficiary, as long as assets are not used to pay for the same qualified expenses.

  • Any individual whose modified adjusted gross income (AGI) is less than $95,000 (single) or $190,000 (joint) can make a full annual contribution of $2,000. Reduced contributions are allowed for individuals with AGIs between $95,000 and $110,000 (single) or $190,000 and $220,000 (joint).

  • The deadline to make contributions to a Franklin Templeton Coverdell ESA is your tax-filing deadline (usually April 15), not including extensions.

  • Assets in the account must be distributed to the designated beneficiary by age 30, or transferred to another Coverdell ESA for the benefit of another eligible family member — except in the case of a Special Needs Beneficiary.

    Distributions for qualifying education expenses are tax free. If the distributions are more than the beneficiary’s qualified education expenses for the tax year, a portion of the distribution will be taxable to the beneficiary.

  • A $15 maintenance fee will apply, regardless of the number of funds you choose. This fee is automatically deducted from your account each year, unless you pay the fee separately by check.

  • Franklin Templeton is one of the largest mutual fund organizations in the U.S., offering a variety of professionally managed mutual funds covering every major asset class. Whether your risk/reward profile leads to a conservative, moderate or aggressive asset allocation plan, Franklin Templeton Investments offers funds to meet your investment needs.

    Before you invest, you should carefully consider a fund’s goals, risks, charges and expenses. This and other information is contained in the fund’s prospectus. Please read the prospectus carefully before investing or sending money.

  • To establish a Franklin Templeton Coverdell ESA, simply complete the Coverdell ESA account application and return it to us. You can also access individual forms on our Forms and Applications page.

    Call us at (800) 527-2020 and start saving for education expenses today.

    Franklin Templeton Coverdell Education Savings Account (ESA) is designed to help accumulate assets for a child's elementary, secondary and post-secondary education. It can help you pay for qualified education expenses such as tuition, fees, books, supplies, and certain room and board costs at eligible elementary, secondary and post-secondary educational institutions.

UGMA/UTMA Accounts

UGMA and UTMA accounts allow you to invest for a child’s education while taking advantage of the child’s potentially lower tax rate.

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  • A way you can transfer assets to a minor under the Uniform Gifts to Minors Act (UGMA) and/or Uniform Transfers to Minors Act (UTMA). Most states have established these acts, allowing adults to transfer assets to a minor.3

  • The Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) allow a minor to own securities in an account without forcing families to underwrite the expense of having an attorney draw up a special trust.

    While UGMA and UTMA accounts are not specifically designed to provide financing for college, many investors use them for this purpose because the assets become available to the minor when he or she reaches the age of majority specified under the state's UGMA or UTMA law (See “Age of majority in your state” below).

  • UGMA and UTMA accounts are similar in many ways, but they differ in the type of assets you can transfer to them.4

    Similarities:

    Both are managed by custodians.

    Parents, grandparents, relatives and friends can make irrevocable transfers in any amount to the account.

    If the donor, acting as custodian, dies before the funds are turned over to the child, the account may be taxable as part of the donor’s estate.

    Differences:

    UTMA law allows virtually any kind of asset, including real estate, to be transferred to a minor.

    UGMA law limits gifts/transfers to bank deposits, securities (including mutual funds), and insurance policies.

  • A donor’s income taxes may be lowered by transferring income-producing assets to a child, who is likely to be in a lower tax bracket. If a parent, acting as custodian dies before the funds are turned over to the beneficiary, the account may be taxable as part of their estate.

  • INCOME LIMITSUNDER AGE 18AGE 18 YEARS AND OLDER
    First $1,050 of unearned income Exempt Exempt
    Second $1,050 of unearned income Taxed at child’s rate Taxed at child’s rate
    More than $2,100 of unearned income Taxed at the higher of the child’s or parents’ rates Taxed at child’s rate

    The first $1,050 of the account’s unearned income (interest, dividends or capital gains) is exempt from federal income tax if the child is under age 18 at the end of the tax year. The second $1,050 of unearned income is taxed at the child’s rate. Any unearned income over $2,100 is taxed at the higher of the child’s or parents’ marginal tax rates.

  • It’s important to note that all assets transferred under UGMA and UTMA law represent irrevocable transfers. This means that the child owns the assets even if he or she decides not to go to college.

  • Upon reaching the age of majority under the state UGMA/UTMA law—usually 18 or 21, depending on the state—the child (minor) gains control of the assets and may use them as he/she sees fit.4

  • Keep in mind that an UGMA or UTMA account may affect the amount of financial aid your child receives. Therefore, some parents invest in their own name instead of the child’s because when it comes to qualifying for financial aid, parental income is less important than the child’s. Custodians may, as permitted by law, use UGMA and UTMA assets for the benefit of the child prior to completing financial aid forms; hence, parents receive the tax benefit and avoid losing financial aid.