Education Savings FAQs

  • You can open a Franklin Templeton 529 College Savings Plan1 for as little as $250—or $25 if you choose the monthly automatic investment plan option. After that, minimum contributions are just $25.

  • Earnings grow federal income tax-free, and earnings are free from federal income tax when withdrawn for qualified higher education expenses or used up to $10,000 per year for tuition for eligible primary and secondary schools2. Contributions are not tax deductible. Individuals may also contribute up to $75,000 ($150,000 if a married couple) per beneficiary to a plan in a single year without paying federal gift tax if no further contributions to that beneficiary are made for the following 5 years. Assets in each plan are generally not included in your federal taxable estate.

    Tax benefits are conditioned on meeting certain requirements. Federal income tax, a 10% federal tax penalty, and state income tax and penalties may apply to nonqualified withdrawals of earnings. Generation-skipping tax may apply to substantial transfers to a beneficiary at least two generations below the contributor. Please refer to the Investor Handbook for more complete information.

  • Absolutely. You—not the beneficiary—maintain control over how and when plan assets will be spent for education expenses.

  • Yes, you can change the beneficiary at any time. To avoid taxes, the new beneficiary must be a member of the previous beneficiary's family (including children, grandchildren, siblings, spouses, nieces and nephews, aunts and uncles, cousins and in-laws).

  • Yes. To move assets from an UGMA or UTMA account into a Franklin Templeton 529 College Savings Plan, the custodian of the UGMA or UTMA account must liquidate any securities in the account, then use the cash proceeds to invest in Franklin Templeton 529 College Savings Plan. This liquidation is a taxable event, and the minor owner of the UGMA/UTMA assets will be taxed on any gain realized on the securities being liquidated. Investment in the 529 plan may result in assessment of a sales charge. The minor must remain the 529 plan beneficiary at all times. When the minor becomes a legal adult, he or she will gain full control of the assets. These factors have significant income, estate and gift, and financial aid qualification considerations that should be discussed in detail with your tax advisor before any decision is reached on liquidating UGMA/UTMA assets and investing them in a Franklin Templeton 529 college savings plan. To obtain a transfer form, please call (800) 818-4030 or visit the Forms & Applications section.

  • You may roll over funds from another qualified tuition program established under Section 529 of the Internal Revenue Service Tax Code to Franklin Templeton 529 College Savings Plan. This rollover will be subject to federal tax requirements, and you will need to provide Franklin Templeton with acceptable documentation from the prior program detailing which portion of any rollover contribution consists of a return of principal and which portion consists of earnings. Contact your tax advisor for more information.

  • You can select a new beneficiary who is a member of the previous beneficiary's family.

  • 529 savings can be used at most accredited two- and four-year colleges and universities and vocational schools, including many outside the U.S., for any qualified tuition expense, as well as other qualified expenses including mandatory fees, supplies, books or other required equipment, and room and board, if the beneficiary is enrolled at least half-time.

    In addition, up to $10,000 per year per beneficiary can be used for tuition for eligible public, private and religious primary and secondary educational institutions (K-12.) At this time, it is not clear what, if any, expenses will be regarded as “tuition” in the case of public schools2.

    • Double tax-free advantage. For earnings withdrawn to pay for qualified college expenses, you will not owe New Jersey state income tax or federal income tax.
    • A scholarship of up to $1,5003. Franklin Templeton 529 College Savings Plan is the only state college savings program to offer a scholarship rewarding students who pursue higher education in New Jersey. The plan offers increasingly larger scholarships based on how long you save, up to a maximum of $1,500 scholarship for over 12 years of saving. For more details, refer to the Plan's Investor Handbook.1
    • Limited interference with New Jersey financial aid. The first $25,000 of plan assets are not considered when determining a beneficiary's eligibility for need-based financial aid awarded by the state of New Jersey.1
  • No it is not. Franklin Templeton 529 College Savings Plan does not guarantee your investment or any specific rate of return, which means you may have a gain or a loss when you sell your shares.

  • Absolutely. You can establish a plan for yourself, your children or even a friend.