Features and Benefits

 

Tax Advantages

  • Earnings on your SMART529 Select account grow tax-deferred, leaving all of your money invested to accumulate for college.
  • Distributions used for qualified higher education expenses (tuition, fees, room, board, books, equipment and supplies) are federal income tax free at any eligible educational institution nationwide including colleges, universities, graduate schools and trade schools. Non-qualified withdrawals are taxable as ordinary income to the extent of earnings and may also be subject to a 10% federal income tax penalty. Such withdrawals may have state income tax implications.

    Other qualified expenses include:

    • K-12 tuition expenses up to $10,000 per year*
    • Repayment of qualified student loans or a maximum lifetime limit of up to $10,000. This includes amounts of repaid principal and interest on any qualified student loan of either a 529 plan designated beneficiary or a sibling of the designated beneficiary.**
    • Apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act. Includes expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in a program.**
  • Anyone can contribute up to $15,000 per year ($30,000 for married couples filing jointly) to a to a beneficiary's SMART529 Select account without gift-tax consequences.1  Contributions may be accelerated up to $75,000 ($150,000 for married couples) once per 5-year period without incurring federal gift taxes.2

 

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Account Owner Control

  • As the account owner you maintain complete control of your SMART529 Select account, including how contributions are invested and when withdrawals are made.
  • There is no set deadline for using your account assets. The proceeds can be withdrawn penalty free at any time, if used for qualified3 higher educational expenses.
  • You can change your beneficiary without a federal income tax liability, as long as the new beneficiary is a family member of the current beneficiary.4

 

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Flexibility

  • Your SMART529 Select account can be used to cover qualified3 higher educational expenses at thousands of eligible institutions throughout the country, including colleges, universities, and vocational schools.
  • An account can be opened in anyone's name, including your own.
  • If the beneficiary receives a scholarship, you can withdraw an amount equal to the scholarship from your account without a federal income tax penalty.  The money must be used to pay for qualified education expenses or the earnings will be subject to ordinary income tax, but not the 10% federal income tax penalty. 

 

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Simple, Convenient Contributions

  • It only takes $250 per fund to open a SMART529 Select account, and additional contributions can be as little as $25 per fund.  The annual maintenance fee is waived if you are enrolled in the Automatic Investment Program or Payroll Direct Deposit for $25 or more each month for at least twelve consecutive months, or at least $300 annually, and on account balances over $25,000. If you are a West Virginia resident, an account may be opened with an initial investment of $50 per account, and there are no minimum requirements for subsequent investments.
  • Anyone can contribute to a SMART529 Select account, including friends and relatives.  It's easy to make a gift contribution to a SMART529 Select account.
  • Contribute as often as you like.  SMART529 Select's Automatic Investment Program makes contributing directly from a checking or savings account each month simple. Or, you can sign up for Payroll Direct Deposit if your employer supports this program.
  • There are no limits on contributions until your account balance reaches $400,000.5

 

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Investment Options

  • SMART529 Select offers a wide range of professionally managed investment options ranging from conservative to aggressive.
  • Investing is convenient with asset allocation models based on the beneficiary's age (Age-Based Portfolios), or based on your risk tolerance and the time before college starts (Static Portfolios).
  • The Age-Based and Static Portfolios are automatically rebalanced back to their original allocations on a quarterly basis.
  • Tax-free transfers between investment options are allowed twice per calendar year.
  • Investment returns are not guaranteed, and you could lose money by investing in the Plan.

 

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*Hartford Funds does not provide tax advice. Investors should work with a financial intermediary to select an appropriate investment option based on the investor's goals, particularly if the investor is considering using the assets for K-12 tuition. The SMART529 investment options were designed for saving for college, particularly the Age-Based Portfolios. Certain Portfolios may be more appropriate for saving for K-12 tuition than others. State income tax treatment varies by state. Please consult with a local tax advisor for more information.

**State income tax treatment varies by state. Please consult with a local tax advisor for more information.

1 Any additional gifts to the same designated beneficiary in that period would be subject to federal gift tax.

2 Any additional gifts to the same beneficiary in that 5-year period would be subject to federal gift tax. If the donor elects to treat the gift as being made over 5 years, and the donor dies prior to the end of that 5-year period, the portion of the gift allocable to the period after the donor's death will be included in the donor's estate. Estate tax treatment may differ by state. Please consult your tax advisor for more information.

3 Qualified expenses include tuition, fees, the cost of books, supplies and equipment required for enrollment.

4 The following family members of the existing Designated Beneficiary are considered “Eligible Family Members” and can be named as the replacement Designated Beneficiary: son, daughter, or descendant of either; stepson or stepdaughter; brother, sister, stepbrother or stepsister; stepfather or stepmother; father, mother or ancestor of either; son or daughter of a brother or sister; brother or sister of father or mother; son-in-law, daughter-in-law, father-in-law, mother-in-law, sister-in-law or brother-in-law; spouse or spouse of any family member listed above; or first cousin.

5 Effective August 1, 2018


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