The goal of 529 savings plans is simple – they are investment vehicles designed to help families save for qualified investment expenses without the burden of taxes. The plans are named after a specific section of the IRS Code, which allows investments in “529s” to grow tax-deferred and assets used for expenses like college tuition, books and room and board to be withdrawn free from federal taxes. Additional state tax benefits may also be available depending on your specific plan and state of residence.
Who can be a beneficiary of a BlackRock CollegeAdvantage 529 account?
Any U.S. citizen or legal U.S. resident can be the beneficiary of a BlackRock CollegeAdvantage 529 account. It is not required for the account owner and beneficiary to be related in any way, and if so desired, an account owner is free to name himself/herself as the beneficiary.
Can I change the beneficiary?
You may change the beneficiary of your account, but in order to avoid taxes or penalties, the new beneficiary must be a qualified member of the previous beneficiary's family, unless the account is a Scholarship Account. See the Program Description for details on qualifications. Additionally, you may not change the beneficiary if such a change would cause the aggregate account balances of all CollegeAdvantage Program accounts, for the new beneficiary, to exceed the Maximum Contribution Limit (currently $414,000).
Who can contribute to a BlackRock CollegeAdvantage 529 Account?
Anyone, including individuals, corporations, charities, partnerships or trusts can contribute to, establish and own accounts.
Can I transfer assets from an UGMA/UTMA account?
Yes, but there are several considerations you should be aware of before doing so. If you are in a custodial role for a minor with a UGMA/UTMA, you may move some or all of the UGMA/UTMA assets to a 529 plan, provided that the minor remains the beneficiary of the new account. However, prior to transferring the assets, you must liquidate funds from the UGMA/UTMA account and should discuss any resulting tax consequences with your financial professional. Finally, as an UGMA/UTMA custodian, you must notify the 529 plan when the beneficiary reached the legal age of majority, which is 21 in most states.
How will having assets with BlackRock CollegeAdvantage affect a beneficiary's chances for financial aid?
Financial aid treatment changes often and each school maintains its own policies, so it is of the utmost importance that you inquire about your unique situation when considering how 529 assets will affect any financial aid package. As a general rule, however, assets held in a 529 plan are treated as parental assets if one parent is the account owner. If the student is the account owner and beneficiary or is considered “independent” for financial aid purposes, any 529 assets will be attributed to the student. You should consult with your financial professional to determine how any 529 plan assets will be treated according to your specific circumstances.
What if the beneficiary does not need the assets?
A key advantage of all 529 plans is that the assets remain in the control of the account holder. If the selected beneficiary does not need the assets for any reason, you have several options available to you. You can select a new beneficiary provided he/she is a qualified family member related to the previous beneficiary. Qualifications are listed in the Program Description and such a change may represent a taxable event. You can take a non-qualified distribution to use as you see fit, but it is important to note that federal income taxes, penalties and state/local taxes may apply to the portion of your assets attributable to earnings. You can simply keep your assets in the 529 plan in the event that the original beneficiary changes his/her mind.
BlackRock CollegeAdvantage is sponsored by the state of Ohio. Do 529 plans differ from state to state?
Yes. The main differences from state to state are the investment options offered to account holders and tax benefits available to residents of the sponsoring state. While BlackRock CollegeAdvantage is available to investors across the country and offers uniform federal tax benefits to all account holders, investors in Ohio can take advantage of additional state tax advantages. Prior to investing in any 529 plan, it is recommended that you consult a tax professional or financial professional to make sure all tax consequences are considered before opening an account.
What happens if I move to another state?
Unless you are moving to or away from Ohio, there will be no changes to your BlackRock CollegeAdvantage account. Since BlackRock has partnered with the Ohio Tuition Trust Authority, you would gain a state tax advantage should you move into Ohio. Conversely, you could lose that tax advantage if you leave Ohio and are no longer considered a resident of the state.
How can I withdraw funds to pay college expenses?
Whether you have questions or are requesting a straight-forward withdrawal (i.e. sent directly to you at the address of record), the easiest way to make a withdrawal is to call our 529 Team at 1-866-529-8582. As there can be multiple factors to consider when requesting a withdrawal, for your first time we recommend speaking with a 529 Specialist first to review your options.
529 Withdrawals can be made in writing, via telephone or online in the following ways:
Payable to the Owner – sent by check to the address or to the Owner’s bank account on file
Payable to the Beneficiary– sent by check to the address or to the Owner’s bank account on file
Withdrawals to the school (eligible educational institution) either in writing or, once established in writing, via telephone:
Sent to the school for the benefit of the Beneficiary
You can find more information on requesting a withdrawal here.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For this and more information on BlackRock funds, please view a prospectus. The prospectus should be read carefully before investing.
The information on this web site is intended for U.S. residents only. The information provided does not constitute a solicitation of an offer to buy, or an offer to sell securities in any jurisdiction to any person to whom it is not lawful to make such an offer.
The information provided is not intended to be tax advice. Investors should be urged to consult their tax professionals or financial advisors for more information regarding their specific tax situations.
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