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  • Have a question about the T. Rowe Price College Savings Plan? You can find the answer here. Please choose a topic below for related questions.

    What exactly is a 529 plan?

    A 529 plan is a tax-advantaged way for families to save money for college tuition and education-related expenses. Contributions to the plan are made with after-tax dollars, but any earnings are tax-deferred while invested in the plan and tax-free if used to pay for qualified educational expenses.** You should compare this plan with any 529 college savings program offered by your state. The "529" refers to the section of the Internal Revenue Code that created these plans.

    What is the T. Rowe Price College Savings Plan?

    The T. Rowe Price College Savings Plan is a Morningstar "Gold" rated 529 Plan that provides an excellent way to help a child, grandchild, or any other loved one save for college.* You contribute to an account that you control on behalf of a specific beneficiary, and the money can be withdrawn free of federal taxes as long as it's used to pay qualified educational expenses at any eligible college, technical school, or graduate school.

    Why should I invest in this plan?

    The T. Rowe Price College Savings Plan offers you more flexibility and advantages than many other alternatives.

    Expert Approach
    With T. Rowe Price, your best interest is our only interest. Since 1937, our experts have helped clients around the world achieve their long-term financial goals. You can count on us to deliver investment management expertise and leading no-load mutual funds to help meet your college savings goals.

    Nationwide College Choice
    Assets can be used toward qualified expenses at any eligible private or public college, university, graduate school, or vocational school anywhere in the country. Some international schools may qualify as well.

    Investment Options
    You have a choice of 13 professionally managed portfolios specifically designed for saving for college expenses.

    Tax-Free Growth Potential
    The Plan allows you to save for future education expenses like tuition, fees, room and board, books, and supplies. When you save, and use it toward qualified educational expenses, you don't have to pay tax on any earnings. That means you could have more tax-free money to use toward college.**

    $50 a Month
    It's easy to save—you can get started for as little as $50 a month. In addition, we'll waive the annual account fee when you invest through Automatic Monthly Contributions.

    ** Please note that the availability of tax or other benefits may be conditioned on meeting certain requirements such as residency, purpose for or timing of distributions or other factors as applicable.
    Which college expenses does the Plan cover?

    The Plan can be used for tuition, fees, room and board, books, supplies, and equipment required by a qualified institution of higher education, as well as certain expenses for special needs students. For more information, check IRS publication 970.

    Who can be a beneficiary?

    Any U.S. resident, including the account holder, can be a beneficiary. The beneficiary must be an individual, not a trust or corporation. There are no income limitations, age restrictions, or residency requirements. In fact, if you're thinking of going back to school, you can even open an account for yourself.

    Will opening a 529 plan affect our chances for financial aid?

    Money in a 529 plan is generally considered to be an asset of the parent, as opposed to the student/beneficiary. Enrollment in the Plan may affect the expected family contribution calculations used for financial aid. For more information, refer to the Financial Aid FAQ in our college planning section.

    Who controls the account?

    Only one person—referred to as the account holder—can open and control an account. If the account holder is a minor, a custodian must act on the minor's behalf. Each account may have only one beneficiary (future student), but you can open as many accounts for as many beneficiaries as you want.

    What if my beneficiary doesn't go to college?

    You can request a distribution, as a nonqualified withdrawal, or change the beneficiary to an eligible family member.

    The new beneficiary must be a relative of the old beneficiary as defined by the IRS. A family member includes the beneficiary's spouse and the following other relatives of the beneficiary:

    1. Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them.
    2. Brother, sister, stepbrother, or stepsister.
    3. Father or mother or ancestor of either.
    4. Stepfather or stepmother.
    5. Son or daughter of a brother or sister.
    6. Brother or sister of father or mother.
    7. Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
    8. The spouse of any individual listed above.
    9. First cousin.
    How do I take a distribution from my account?

    You can request a distribution by logging in to your account at Price529.com, over the phone by calling 1-866-521-1894, or completing a Distribution Form. Please allow up to two weeks for processing and mail time.

    Who is eligible to enroll in the Plan?

    Nearly anyone interested in helping a beneficiary pay for the costs of higher education can open an account. This includes a parent, grandparent, aunt or uncle, friend, or employer. You can even open an account for yourself. There are no residency requirements for account holders, contributors, or beneficiaries.

    Is there an age limit for the beneficiary?

    No. You can open an account for a beneficiary regardless of his or her age.

    Can the same person be named as beneficiary on more than one account?

    Yes, multiple accounts can be opened for one beneficiary. For example, a parent and a grandparent can each open an account for a beneficiary. However, the total balance for a single beneficiary cannot exceed $400,000.

    Can there be two account holders on the same account?

    No, only one person can be named as the account holder on an account. The account holder is the only person who can make decisions regarding that account, like changing beneficiaries, choosing investment options, etc. You can, however, add a successor account holder to your account.

    Can I take a distribution from my account at any time?

    Yes, but the earnings portion of a nonqualified distribution may be subject to federal and state income taxes, in addition to a 10% federal tax penalty. A distribution is exempt from the 10% penalty (but not the taxes) in the following situations:

    1. Receipt of scholarship by beneficiary (up to the amount of the scholarship).
    2. Death of the beneficiary.
    3. Disability of the beneficiary.
    4. Attendance at a U.S. military academy (up to the cost of attendance at the academy).
    Which educational institutions are eligible?

    Beneficiaries can use funds at any accredited college, university, vocational school, or postsecondary educational institutions. For a complete listing of eligible institutions, visit www.fafsa.gov.

    What if the money is spent on something other than a qualified educational expense?

    The distribution may be subject to federal and state income taxes plus a 10% federal penalty on the earnings. There are cases, such as in the event of a scholarship, appointment to a military academy, disability, or death of the beneficiary, where the distribution would not be subject to the 10% penalty, but may be subject to income taxes.

    Is repaying a student loan considered a qualified educational expense?

    No. The distribution may be subject to federal and state income taxes, plus a 10% federal penalty.

    Are my contributions tax-deductible?

    Not from federal taxes. In some cases, they may be deductible from state income tax. For example, Pennsylvania, Maine, Arizona, Kansas, Montana, and Missouri provide for state tax parity, whereby contributions to any 529 plan are eligible for the state's income tax deduction. Consult your tax professional for more information.

    Are distributions from the account for qualified expenses taxed?

    Distributions used to pay for qualified educational expenses are exempt from federal taxes, and, in some states, from state taxation.* T. Rowe Price does not withhold taxes.

    Who pays the taxes when the money is distributed from the College Savings Plan account to cover nonqualified educational expenses?

    Depending on who receives the distribution, either the beneficiary or the account holder is responsible for taxes. There is a 10% federal penalty on the earnings of all distributions for nonqualified expenses.

    Why can your College Savings Plan be better than opening a taxable account?

    College savings accounts are free of federal taxation* when used to pay for qualified educational expenses, so any earnings can compound at a much greater rate than those in a taxable account. Over time, the difference may be considerable.
    *Please check with your state or a tax advisor regarding the specific tax rules for your state.

    Can 529 plans provide estate or gift tax benefits?

    Our College Savings Plan is an excellent estate planning tool. You can significantly reduce the value of your taxable estate by funding a 529 plan. In 2014, gifts to an individual that exceed $14,000 in a single year are subject to the federal gift tax. However, for 529 plans, gifts of up to $70,000 ($140,000 for a married couple) can be made in a single year and can be exempted when averaged over five years of tax returns. Also, unlike many other kinds of gifts, you can retain control over your gifted assets.

    What investment options do I have for my contributions to the plan?

    Our College Savings Plan offers you a broad range of professionally managed investment options. You can choose Enrollment-Based Portfolios that periodically adjust to reflect your beneficiary's investing time horizon as he or she gets closer to expected college entry. Or you can choose from five Static Portfolios, which maintain a consistent investment allocation over time. If your or your beneficiary's goals change, you can switch portfolios, but you are limited in the number of times you can make a change per calendar year. Visit the Portfolio Options section to learn more about your investment options.

    How much will my investments earn?

    Your investment earnings depend on the market's overall performance and the specific investment portfolio that you choose. Each account fluctuates based upon market conditions.

    Can I change my investment options?

    Yes. Each time you contribute to an account, you may select a different portfolio. You are allowed one reallocation between investment options in your 529 plan per calendar year. If you have already made one reallocation on your account this year, you cannot make another change until next year.

    What fees are associated with an account in the College Savings Plan?
    1. There is a $10 Annual Account Fee, prorated across your accounts for the same beneficiary. That fee, however, is waived:
      • When you invest regularly through our Automatic Monthly Contributions or by payroll deduction.
      • If your total balance for a beneficiary is $25,000 or more.
      • If your combined account balance, regardless of beneficiaries, is $75,000 or more.
      • If the Account Holder (or Custodian, if applicable) is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client. Enrollment in these programs generally requires assets of at least $100,000 with T. Rowe Price.
    2. There is an annualized Program Management Fee of 0.20% generally charged to each portfolio. Each portfolio bears its share of the expenses of the underlying mutual funds in which it invests. The program manager fee and underlying mutual fund expenses are reflected in each portfolio's unit price. As with most investments, the portfolio also reflects some of the costs of the funds it invests in.
    Can I move assets from a 529 plan at another state to my new T. Rowe Price College Savings Plan account?

    Transfers between 529 plans for the same beneficiary are limited to one transfer every 12 months, but there is no restriction on the frequency of transfers between 529 plans if the beneficiary is changed to another family member in the process of the transfer.

    Assets may also be moved from an UGMA/UTMA account to a 529 account; however, you will not be permitted to change your existing beneficiary to a new beneficiary. Also, the distribution from an UGMA/UTMA may be subject to taxes.

    Consolidating all your educational accounts can simplify your planning and cut down on your paperwork. For more information on making transfers, we welcome you to call a T. Rowe Price customer service representative at 1-800-369-3641 or complete the rollover form.

    Can I transfer assets to someone else?

    Yes, you can transfer your account assets to a relative of the beneficiary as defined by the IRS.

    A family member includes beneficiary's spouse and the following other relatives of the beneficiary.

    1. Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them.
    2. Brother, sister, stepbrother, or stepsister.
    3. Father or mother or ancestor of either.
    4. Stepfather or stepmother.
    5. Son or daughter of a brother or sister.
    6. Brother or sister of father or mother.
    7. Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
    8. The spouse of any individual listed above.
    9. First cousin.

    Morningstar analysts reviewed 64 plans for both its 2013 ratings (10/22/13) and 2012 ratings (10/15/12), of which 4 plans received a "Gold" rating. To determine a plan's rating, Morningstar's analysts considered five factors: the plan's strategy and investment process; the plan's risk-adjusted performance; an assessment of the individuals managing the plan's investment options; the stewardship practices of the plan's administration and parent firm; and whether the plan's investment options are a good value proposition compared to its peers. Plans were then assigned forward-looking ratings of "Gold," "Silver," "Bronze," "Neutral," and "Negative." 21 of the industry's smallest plans were not rated in 2013 and 22 were not rated in 2012.

    Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar analysts' current expectations about future events and therefore involve unknown risks and uncertainties that may cause Morningstar's expectations not to occur or to differ significantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees .

    The T. Rowe Price College Savings Plan is offered by the Education Trust of Alaska. You should compare this Plan with any 529 college savings plan offered by your home state or your beneficiary's home state and consider, before investing, any state tax or other benefits that are only available for investments in the home state's plan. Please read the Plan's Disclosure Document, which includes investment objectives, risks, fees, charges and expenses, and other information. You should read the Plan Disclosure Document carefully before investing. For other important legal information, please read the Plan's Privacy Policy. T. Rowe Price Investment Services, Inc., Distributor/Underwriter.