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Pennsylvania 529 Guaranteed Savings Plan

Pennsylvania

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.

5-Cap Rating

Resident:
Non-Resident:

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)

Financial benefits Safety Features Reliability
4.0 2.0 5.0 4.0

General

Program type:

Guaranteed savings

How to enroll:

Enroll directly with the program.

Initial year of operation:

1993

State agency(ies):

Pennsylvania State Treasury Department

Enrollment period:

Open year-round. Price change each year on September 1.

Eligibility

State residency requirements:

The account owner or beneficiary must be a Pennsylvania resident at the time of program enrollment.

Who can be a participant/owner in the program?

Individuals at least 18 years old, UGMA/UTMA custodians, and legal entities.

Significant time or age restrictions imposed by the program:

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.

Contributions

Maximum contributions:

Accepts contributions until all account balances in Pennsylvania's 529 plans for the same beneficiary reach $452,210.

Minimum contributions:

$15 per transaction; $25 minimum contribution through Ugift.

Contractual Features

Current value of one unit:

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.

Current unit price:

Varies by the "Tuition Level" selected by the participant.

Are program benefits backed by the full faith and credit of the state?

No

Are program benefits collateralized or guaranteed in any other way?

No

Fees & Expenses

Enrollment or application fee:

$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.

Account maintenance fee:

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

Program match on contributions:

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State tax deduction or credit for contributions:

Contributions to Pennsylvania AND non-Pennsylvania 529 plans of up to the gift-tax annual exclusion amount ($14,000 in 2014) 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.

State tax recapture provisions:

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.

State tax treatment of qualified distributions:

Qualified distributions from Pennsylvania and non-Pennsylvania 529 plans are exempt. Accounts in a Pennsylvania 529 plan are also exempt from Pennsylvania inheritance tax.

State tax treatment of rollovers:

Pennsylvania follows federal tax-free treatment.

Does the sponsoring state exclude the value of an account for state financial aid purposes?

Yes

Does participation in the program provide beneficiaries with any advantages in qualifying for resident tuition status at state institutions?

No

Does the program have a formal agreement with a rewards program or outside scholarship program?

Yes, with the Upromise rewards service. Plan participants are also eligible for "Tuition Rewards" - guaranteed tuition discounts at over 200 colleges participating in the privately-run SAGE Scholars program.

Statutory protection of an account from creditors:

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Distributions & Terminations

To whom are distributions made payable:

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.

Account Changes

Policy regarding participant/owner changes:

Accepts requests to transfer account ownership.

Documents, Access & Reporting

Does participant have online password-protected access to account?

Yes

Can the complete enrollment process including funding be done online?

Yes

Contact

Web site:

Click here to visit

Telephone:

1-800-440-4000