FAQs: Getting started
- Opening a 529 account
- What is the College Savings Iowa 529 Plan?
- Who can enroll in the College Savings Iowa 529 Plan?
- Who can benefit from an account?
- Can I open accounts for more than one student?
- Can different people open separate accounts for the same student?
- Can I open an account for an unborn child?
- Why do you need ID numbers and birth dates for both me and the student?
- Can the account owner (participant) be changed?
- Contributing to a 529
- Can I contribute to more than one 529 plan?
- What if I move to another state?
- Can I move money from an ESA or a U.S. savings bond to a 529 plan account?
- Can I move money from another 529 plan to the College Savings Iowa 529 Plan?
- Why must I include a breakdown of principal and earnings when I move money from another plan?
- Can I recontribute refunds from a college or university due to the COVID-19 pandemic?
- Understanding UGMA/UTMA accounts
- Can I open a College Savings Iowa 529 account with the money from an UGMA/UTMA account?
- Who is considered the owner of the UGMA/UTMA 529 account assets?
- Will I be able to change the beneficiary of an UGMA/UTMA 529 account?
- Understanding your investments
- Are portfolio returns guaranteed?
- When can I change my investment options?
- If I am invested in an age-based savings track, do I need to make changes as the student gets older?
- What if I want to allocate part of my investment to a fund or portfolio not listed on this site?
- What should I know about my investment performance?
- What fees apply?
- Managing estate taxes
- What are the estate tax benefits of a 529?
- What are qualified education expenses?
Opening a 529 account
What is the College Savings Iowa 529 Plan?
College Savings Iowa is a 529 plan, which is a tax-advantaged program intended to help an individual or a family pay for education costs. The plan is sponsored and administered by the Treasurer of the State of Iowa.
Who can enroll in the College Savings Iowa 529 Plan?
The plan is open to all U.S. citizens and resident aliens with a valid Social Security or other taxpayer identification number.
Who can benefit from an account?
The student you are opening the account for (the beneficiary) must be a U.S. citizen or resident alien with a valid Social Security number or other taxpayer ID number.
The student does not have to be related to you and does not have to live in Iowa. You can also name yourself as beneficiary and use the money for your own education.
Can I open accounts for more than one student?
Yes. While there can be only one beneficiary (student) named for each account, you can open separate accounts for different students.
Can different people open separate accounts for the same student?
Yes. For example, a father, a mother, a grandparent and an uncle can each open a separate account for the same student and can also open separate accounts for other students.
Can I open an account for an unborn child?
No. The beneficiary (student) must have a Social Security number or other taxpayer identification number.
Why do you need ID numbers and birth dates for both me and the student?
The College Savings Iowa 529 Plan is required by federal law to obtain certain personal information about the participant and the student that we can use to verify your identities. If you do not provide this information, we will not be able to open your account.
If we are unable to verify your identities, the plan reserves the right to decline your application or take other steps we deem reasonable. Your Social Security number is also required for tax-reporting purposes.
Can the account owner (participant) be changed?
Generally, yes. However, special rules may apply for custodians of assets formerly held in a Uniform Gifts/Transfers to Minors Act (UGMA/UTMA) account. (See "Understanding UGMA/UTMA accounts" below for more information.)
You may also name a successor participant to take over for you in the event of your death. Refer to the Program Description to find out how to designate a successor participant.
Contributing to a 529
Can I contribute to more than one 529 plan?
Yes. Participants and students may have multiple accounts in multiple states.
What if I move to another state?
You can maintain your College Savings Iowa 529 account and continue to make contributions no matter where you live in the United States. However, if you are no longer an Iowa taxpayer, you will not be eligible to deduct your contributions for Iowa income tax purposes.
Can I move money from an ESA or a U.S. savings bond to a 529 plan account?
Yes. You can contribute to a College Savings Iowa 529 account with proceeds from the sale of assets held in a Coverdell education savings account (ESA) or the redemption of a qualified U.S. savings bond (Series EE or I). You will need to provide the following documentation:
- For an ESA: an account statement or other documentation issued by the financial institution that acted as custodian of the ESA showing the total amount contributed to the account and the earnings in the account.
- For a U.S. savings bond: an account statement, Form 1099-INT or other documentation from the financial institution that redeemed the bond showing the interest paid at redemption.
Until we receive this documentation, the entire amount of your contribution will be treated as earnings. If the entire contribution is treated as earnings, there may be adverse tax consequences if any portion of the account is subsequently taken as a nonqualified withdrawal.
Please check with your legal or tax advisor about your particular situation.
Can I move money from another 529 plan to the College Savings Iowa 529 Plan?
Yes. You may perform a tax-free rollover of a 529 account for the same student as often as once every 12 months.
You can move money in 1 of 2 ways:
- Direct rollover. Your current 529 plan custodian transfers money directly to College Savings Iowa.
- Indirect rollover. You request a check from the current 529 plan custodian and reinvest it in College Savings Iowa within 60 days.
For a direct rollover, check with your current custodian to verify that it will accept the request for a rollover and to determine if any penalties will apply to the transaction.
When you request a direct rollover using either the Participant Agreement (for new accounts) or the Incoming Rollover Form (for existing accounts), you must provide us with a statement from the plan custodian showing the principal and earnings amounts in the 529 account at the time of distribution.
Why must I include a breakdown of principal and earnings when I move money from another plan?
If you do not provide us with a breakdown of the principal and earnings, federal regulations require that 100% of your rollover or transfer be treated as earnings. Consequently, you may have to pay taxes on the full amount at the time of any subsequent nonqualified withdrawals.
For direct rollovers, the sending plan is required to provide College Savings Iowa 529 with the breakdown, generally within 30 days of the money being transferred.
Understanding UGMA/UTMA accounts
Can I open a College Savings Iowa 529 account with the money from an UGMA/UTMA account?
As the custodian for a minor under the Uniform Gifts/Transfers to Minors Act (UGMA/UTMA), you may be able to open a College Savings Iowa account using custodial assets previously held in the UGMA/UTMA account, subject to the laws of the state where you opened the UGMA/UTMA account.
As custodian of the UGMA/UTMA account, you will act as the participant for the College Savings Iowa account.
Note: There are special rules that apply to UGMA/UTMA accounts. You should consult your tax advisor before transferring assets from an UGMA/UTMA account.
Who is considered the owner of the UGMA/UTMA 529 account assets?
The custodian acts as the account owner (participant). When the custodianship terminates, the student is legally entitled to take control of the account and may become the plan participant.
Will I be able to change the beneficiary of an UGMA/UTMA 529 account?
No. A custodian account owner cannot select a new beneficiary (student), either directly or by means of a rollover, except as permitted under UGMA/UTMA guidelines.
You should make additional contributions of money not previously gifted to the student under the UGMA/UTMA account to a separate, noncustodial account. This will allow you to retain control of the separate account after the custodianship terminates.
Can I recontribute refunds from a college or university due to the COVID-19 pandemic?
Yes. If your beneficiary receives a refund from an eligible higher education institution for money paid for qualified higher education expenses, you may recontribute the refund to the account for which the student is a beneficiary. The money must be recontributed by July 15, 2020, and cannot exceed the refunded amount. This is an exception granted by IRS Notice 2020-23 for 2020.*
Understanding your investments
Are portfolio returns guaranteed?
Returns are never guaranteed and your account value will fluctuate with market performance. As with any investment, you can lose money by investing in the College Savings Iowa 529 Plan.
Keep in mind that the holding period for college investors is short (generally 5 to 20 years), and you should consider investing more conservatively as the time approaches for you to begin making withdrawals.
Note: Before you select an investment option, you should carefully consider your investment time horizon and risk tolerance.
When can I change my investment options?
You can change the investments for your future contributions at any time. Under the federal laws that govern 529 plans, you are able to move money you have already contributed to a different portfolio within your account twice per calendar year or if you change the beneficiary (student).
If I am invested in an age-based savings track, do I need to make changes as the student gets older?
No. Each track's investments will automatically adjust as your student gets closer to college age, shifting gradually from more aggressive investments to more conservative ones.
Your assets will be moved to the next portfolio in the track by the 5th business day of the month following the student's 5th, 7th, 9th, 11th, 13th, 15th, 17th, 18th and 19th birthdays. You should monitor your investments over the years and make adjustments if appropriate.
What if I want to allocate part of my investment to a fund or portfolio not listed on this site?
The 14 investment options offered by the College Savings Iowa 529 Plan have been selected specifically for the plan and are the only investment options available.
What should I know about my investment performance?
The returns displayed on this site reflect past performance, are net of the management fee and are not a guarantee of future performance.
Keep in mind that you do not actually own shares in the underlying funds. Instead, you own portfolio units of the College Savings Iowa 529 Plan, which means the returns for a particular portfolio may vary from the returns of the underlying funds.
What fees apply?
College Savings Iowa charges a total annual asset-based management fee of 0.19%. That means for every $1,000 you invest, you pay $1.90 in fees per year.
There are no advisor fees or sales commissions, like those you may find with other types of plans.
Managing estate taxes
What are the estate tax benefits of a 529?
Money you contribute to a 529 account is generally treated as a completed gift to your student, but as the participant, you still have control over it. If you die with money remaining in your account, it will not be included in your estate for federal estate tax purposes.
However, if you took advantage of the option to treat a single $75,000 contribution ($150,000 for married couples) to a 529 plan account as if it was made over 5 years and you die within 5 years of contributing, a prorated portion of the contribution will be subject to estate tax.
For more information, consult your tax advisor or estate planning attorney.
What are qualified education expenses?
Qualified withdrawals from your account can be used to pay for tuition, room and board (with limitations), books, supplies, fees and equipment required for enrollment or attendance at any eligible educational institution in the United States or abroad, as well as computers or certain peripheral equipment, certain computer software or internet access and related services that are to be used primarily by the Beneficiary during any of the years the Beneficiary is enrolled at an eligible educational institution.
Qualified withdrawals can also be used for tuition expenses in connection with enrollment at an elementary or secondary public, private or religious school. Section 529 permits withdrawals from 529 college savings accounts up to an aggregate of $10,000 per year per student for tuition expenses in connection with enrollment at a K-12 Institution. In addition, Iowa taxpayers can use the College Savings Iowa 529 Plan assets to pay for K-12 tuition with no Iowa state tax consequences as long as the student attends an elementary or secondary school in the state of Iowa which is accredited under Iowa Code Section 256.11 and adheres to the provisions of the federal Civil Rights Act of 1964 and Iowa Code Chapter 216, or (ii) an elementary or secondary school located outside the state of Iowa that educates a Beneficiary who meets the definition of “children requiring special education” in Iowa Code Section 265B.2, if the elementary or secondary school is accredited under the laws of the state in which it is located and adhere to the Federal Civil Rights Act of 1964 and applicable state law analogous to Iowa Code Chapter 216. State tax treatment of K-12 withdrawals is determined by the state(s) where the taxpayer files state income tax. If you are not an Iowa taxpayer, please consult with a tax advisor.
Additionally, qualified withdrawals include (1) fees, books, supplies and equipment required for participation in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act, and (2) amounts paid as principal or interest on any qualified education loan of the beneficiary or a sibling of the beneficiary; provided that the total amount that may be used from all accounts for repayment of loans of a beneficiary may not exceed $10,000. You should consult your tax advisor for more information.