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Pennsylvania 529 Guaranteed Savings Plan
In the Pennsylvania 529 Guaranteed Savings Plan, Pennsylvania residents acquire units that increase in value over time to track average tuition increases in one of several school categories as selected by the participant. The ability to switch categories retroactively makes this a flexible option to lock in tuition no matter which particular college the beneficiary attends. Accounts can be linked to the Upromise rewards service.
Savingforcollege.com's 5-Cap Ratings provides an evaluation and comparison of 529 plans, utilizing a formula that examines dozens of factors grouped into the following categories. (Scale 0 to 5; 5 is highest)
Did you know?
Residents are not limited to investing in their own state's plan. Another state may offer a plan that performs better and has lower fees. If there is no tax break offered for in-state investors ... shop around!
Also, the plan chosen does not affect which state the student enrolls in. An investor can live in NY, invest in a plan from NV and send a student to college in FL.
Enroll directly with the program.
Pennsylvania State Treasury Department
Open year-round. Price change each year on September 1.
The account owner or beneficiary must be a Pennsylvania resident at the time of program enrollment.
Individuals at least 18 years old, UGMA/UTMA custodians, and legal entities.
There is an approximate one-year wait after a contribution is made before tuition inflation growth associated with the contribution can be used to pay for college expenses. A non-qualified withdrawal of less than the entire account can be requested one time per year.
Accepts contributions until all account balances in Pennsylvania's 529 plans for the same beneficiary reach $452,210.
$15 per transaction; $25 minimum contribution through Ugift.
Determined by the "Tuition Inflation Rate" for the "Tuition Level" selected by the participant; may be reduced with a non-qualified withdrawal to the "net earnings rate" of the program fund's investments but not below the participant's contributions less fees.
Varies by the "Tuition Level" selected by the participant.
Fees & Expenses
$50 for accounts opened by mail; $25 for accounts opened online with an electronic bank transfer. Waived for newborns and newly adopted children if the account is opened within six months of the child's birth or finalization of adoption.
The plan imposes a 0.44% asset-based fee ($4.40 per $1,000 of account value per year) paid via reduction in plan credits. Account owners who receive statements and notices via email pay a 0.35% asset-based fee not to exceed $250 per year.
Taxes and other Benefits
Match available for Pennsylvania low-income families (200% of the federal poverty level or 80% of the area median income) participating in the Family Savings Account Program offered through the Pennsylvania Department of Community and Economic Development.
Contributions to Pennsylvania AND non-Pennsylvania 529 plans of up to the gift-tax annual exclusion amount ($14,000 in 2016) per beneficiary are deductible in computing Pennsylvania taxable income. Spouses filing jointly must each have at least $14,000 in income to claim the maximum $28,000 per-beneficiary deduction. Rollovers from another 529 plan or from qualified U.S. savings bonds are not eligible for the deduction.
Nonqualified distributions from any 529 plan are included by Pennsylvania taxpayers in Pennsylvania taxable income to the extent they are not a recovery of nondeductible contributions, following rules set forth in PIT Bulletin 2006-04. Rollovers are not subject to Pennsylvania tax.
Qualified distributions from Pennsylvania and non-Pennsylvania 529 plans are exempt. Accounts in a Pennsylvania 529 plan are also exempt from Pennsylvania inheritance tax.
Pennsylvania follows federal tax-free treatment.
Does participation in the program provide beneficiaries with any advantages in qualifying for resident tuition status at state institutions?
Yes, with Upromise. The Upromise rewards service is free and offers cash back for college.
Plus, members can earn up to an additional 5% cash back with the Upromise MasterCard®.
Plan participants are also eligible for "Tuition Rewards" - guaranteed tuition discounts at over 200 colleges participating in the privately-run SAGE Scholars program.
Under Pennsylvania law, a Pennsylvania 529 account or any legal interest therein shall not be subject to attachment, levy, or execution by any creditor of an account owner or beneficiary.
Distributions & Terminations
Account owner, eligible educational institution, or third parties (other than the beneficiary) designated by the account owner. Substantiation of expenses is required in order to receive full value as a qualified withdrawal.
Accepts requests to transfer account ownership.
Documents, Access & Reporting