529 Plan FAQs
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On this page:
- What is the minimum to open an account?
- What are the federal tax benefits?
- Do I own the plan?
- Can I change the beneficiary?
- Can I move assets from an UGMA/UTMA account to Franklin Templeton 529 College Savings Plan?
- Can I roll over other 529 plan assets into my Franklin Templeton 529 College Savings Plan?
- What if my beneficiary doesn't go to college?
- What if I need my money for a non-education related expense?
- What education expenses are eligible?
- What are the special advantages for beneficiaries living in New Jersey?
- Is my plan's value guaranteed?
- Can I set up a plan for beneficiaries other than my own children?
What is the minimum to open an account?
You can open a Franklin Templeton 529 College Savings Plan for as little as $250—or $50 if you choose the monthly automatic investment plan option. After that, minimum contributions are just $50.
What are the federal tax benefits?
Withdrawals for qualified higher education expenses are free from federal income taxes. Contributions are not tax deductible. Individuals may also contribute up to $70,000 ($140,000 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.
Do I own the plan?
Absolutely. You—not the beneficiary—maintain control over how and when plan assets will be spent for higher education expenses.
Can I change the beneficiary?
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).
Can I move assets from an UGMA/UTMA account to Franklin Templeton 529 College Savings Plan?
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.
Can I roll over other 529 plan assets into my Franklin Templeton 529 College Savings Plan?
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.
What if my beneficiary doesn't go to college?
You can select a new beneficiary who is a member of the previous beneficiary's family.
What if I need my money for a non-education related expense?
If you withdraw money for reasons other than qualified higher education expenses, you must pay federal and state income tax on earnings, a 10% federal tax penalty on earnings and possibly state penalties.
What education expenses are eligible?
Your beneficiary can attend almost any U.S. full-time or part-time undergraduate or graduate school. Plan assets may also be used for training after high school at many proprietary trade schools. In both cases, plan assets may be applied to tuition, fees, required books, supplies and equipment, and room and board if the beneficiary is enrolled at least half time.
What are the special advantages for beneficiaries living in New Jersey?
- Double tax-free advantage. For earnings withdrawn to pay for qualified expenses, you will not owe New Jersey state income tax or federal income tax.
- A scholarship of up to $1,500. 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
Is my plan's value guaranteed?
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.
Can I set up a plan for beneficiaries other than my own children?
Absolutely. You can establish a plan for yourself, your children or even a friend.
Important Legal InformationInvestors should carefully consider plan investment goals, risks, charges and expenses before investing. To obtain an Investor Handbook, which contains this and other information, talk to your financial advisor, go to the Order 529 Literature section on this website, or call Franklin Templeton Distributors, Inc., the manager and underwriter for the plan, at
- Please refer to the Investor Handbook for more complete information or speak with your financial advisor.
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