529 plans are savings vehicles designed to encourage saving for higher education ("529" refers to section 529 of the Internal Revenue Code). Most states offer a 529 plan. State programs differ regarding participation requirements, investment options, state tax advantages, use of contributions, and other benefits. You should compare this plan with any 529 college savings program offered by your state.
This nationally recognized 529 plan, open to all U.S. residents, can be an excellent way to help a child, grandchild, or any other beneficiary save to attend college. You contribute to an account set up in your beneficiary's name, and the money can be withdrawn free of federal taxes as long as it's used to pay qualified educational expenses. The assets can be used at any eligible college or graduate school.
This 529 plan gives you more flexibility and advantages than many other alternatives. See Why Choose the T. Rowe Price College Savings Plan for more information.
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.
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 impact the expected family contribution calculations used for financial aid. For more information, see Financial Aid FAQ in our college planning section.
Almost anyone who wants to help a beneficiary pay for the rapidly rising costs of higher education can start 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.
No. You can start an account for a beneficiary no matter what his or her age.
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, contributions can no longer be accepted once the total for all accounts for that beneficiary exceeds $400,000.
No, only one person can be named on each account as account holder. The account holder is the only person who can make decisions regarding that account (changing beneficiaries, choosing investment options, etc.).
Any U.S. resident is eligible to be a beneficiary. The beneficiary does not have to be a relative or a family member of the account holder but must be an individual and not an entity. Because there are no age limits, the plan is an excellent way to fund adult education.
You can choose from the following family members of the beneficiary:
- A son, daughter, stepchild, foster child, adopted child, or descendant of any of them;
- A brother, sister, stepbrother, or stepsister;
- The father or mother, or an ancestor of either;
- A stepfather or stepmother;
- A son or daughter of a brother or sister;
- A brother or sister of the father or mother;
- A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law;
- The spouse of the beneficiary or the spouse of any individual described in (1) through (8) of this definition; or
- A first cousin of the beneficiary.
Please see the Plan Disclosure Document for additional details regarding transferring an account.
Distributions used to pay for qualified educational expenses are exempt from federal taxes, and, in some states, from state taxation.* We do not withhold taxes.
Depending on who receives the distribution, either the beneficiary or the account holder is responsible for taxes. Also note that there is a 10% federal penalty on the earnings of all distributions for nonqualified expenses.
These accounts will be free of federal taxation* when used to pay for qualified educational expenses and any earnings can compound at a much greater rate than those in a taxable account. Over time, the difference may be considerable.
The 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 choose from five Static Portfolios. If your or your beneficiary's goals change, you can switch portfolios, but are limited in the number of times you can make a change per calendar year. Visit the Our Plan Explained section to learn more about each of these options.
Any investment earnings will depend on the market's overall performance and the specific portfolio that you choose. Each account will fluctuate based upon market conditions.
Yes. You can switch portfolios, but are limited in the number of times you can make a change per calendar year.
Yes, you can transfer your account assets to a "member of the family" of the beneficiary, as defined by the IRS. See Beneficiary Changes for more information.
- Transfer the account to one of the beneficiary's family members
- Take a distribution from the account (taxes and penalties may apply)
Yes, The T. Rowe Price College Savings Plan can be a good way to save for graduate school since it offers an account maximum of $400,000.
No, your beneficiary can make that choice on his or her own schedule. Once your beneficiary decides, the plan assets can be used for educational expenses at virtually any accredited college or university in the U.S.
Yes, these tax credits can be used by the parent and/or student at the time that tuition is paid to a college or university. Federal guidelines (including income range and the student's year in college) govern who can take advantage of these credits.
Yes. But understand that the earnings portion of nonqualified distributions 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) will be excused in the following situations:
- Receipt of scholarship by beneficiary (up to the amount of the scholarship)
- Death of the beneficiary
- Disability of the beneficiary
- Attendance at a U.S. military academy (up to the cost of attendance at the academy)
There is a $10 annual account maintenance fee assessed per group of identically registered accounts (i.e., same account holder and beneficiary). Please note the account fee is waived for an account holder whose accounts for a beneficiary total at least $25,000, for an account holder whose accounts (regardless of beneficiary) total at least $75,000, or those making systematic contributions (either through payroll deduction or the Automatic Asset Builder program).
There is a 20–basis–point (.20%) annualized program manager fee assessed to each portfolio, plus each portfolio indirectly bears its pro-rata share of the fees and expenses of the underlying mutual funds in which it invests. These fees are already reflected in the portfolios' unit prices that are calculated each business day. See Plan Disclosure Document for details.
Transfers between 529 plans for the same beneficiary are limited to once per 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 note that the redemption 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, call a T. Rowe Price customer service representative at 1-800-369-3641.
If you are currently saving for college with an UGMA or UTMA account, you could increase your growth potential by using that money to fund your 529 plan. While any gains from your UGMA/UTMA account will be taxed upon withdrawal, your 529 assets can be used to pay eligible college expenses free from federal taxes.
The plan is an excellent estate planning tool. You can significantly reduce the value of your taxable estate by funding a 529 plan. In 2013, you can contribute up to $70,000 ($140,000 for married couples) for your beneficiary immediately without incurring a federal gift tax. Also, unlike many other kinds of gifts, you can retain control over your gifted assets.
You can withdraw your Upromise contributions at any time during your membership. To withdraw contributions from your Upromise account, submit a letter in writing to Upromise requesting a withdrawal from your Upromise account. The letter must state your full name and the exact amount that you would like to withdraw, up to the total amount available in your account. Pending contributions are not eligible for withdrawal.
Upromise requires that the letter contain a signature guarantee for withdrawal requests in excess of $200. A signature guarantee is a guarantee you can obtain from a financial institution, such as your bank. Your withdrawal letter should be sent to:
ATTN: Customer Care
P.O. Box 55555
Boston, MA 02205-5555
Checks are sent once per calendar quarter, so you should typically receive your check within 12 weeks of your request being received by Upromise.
Once you have received and cashed your Upromise contribution withdrawal check, write a check for the amount you would like to contribute to your T. Rowe Price College Savings Plan account. Please note that the minimum contribution per portfolio is $50.00.
Please make your check payable to:
T. Rowe Price
Write your account number on the check and mail it to us at:
T. Rowe Price College Savings Plan
P.O. Box 17300
Baltimore, MD 21297-1300
*Upromise information is provided as a service to T. Rowe Price Web site visitors. T. Rowe Price is not affiliated with, does not endorse, and is not endorsed by Upromise.
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.