Here are some of the features offered by the PA 529 Investment Plan that make saving for college simple and convenient:
Open to all U.S. citizens and resident aliens
Any U.S. citizen or resident alien who is at least 18 years of age with a valid Social Security or taxpayer identification number and valid U.S. mailing address that is not a P.O. Box can open one or more accounts for any future student. There are no restrictions on state of residence or income for the account owner or the beneficiary. Corporations and certain other types of entities may participate in the Investment Plan.
Broad usage
Save for anyone: child, grandchild, or friend—even yourself. You can use your account to pay for tuition, fees, books, certain room and board expenses, and supplies at any eligible postsecondary school in the United States and abroad.
You can change the beneficiary or transfer a portion of the account to a different beneficiary without adverse tax consequences, provided the two beneficiaries are members of the same family.
Easy enrollment
You can open and manage your Investment Plan account online. View your statements, make contributions or qualified withdrawals, maintain your account, and obtain performance information anytime you like. If you open more than one account, you can view them all with one user name and password.
Low minimum investment
You can invest as little as $25 each time you contribute, or $15 if contributing through payroll deduction.
Multiple contribution methods
You can contribute by automatic investment, electronic bank transfer, payroll deduction (if available through your employer), check, or by moving assets from other college savings vehicles.
Opportunity to earn free money for college
Take advantage of Upromise®, a free service in which you can get back a percentage of your eligible spending with hundreds of America's leading companies. This money can be transferred periodically to your Investment Plan account, subject to a $25 minimum transfer amount.
Wide range of investment choices
Choose from three age-based savings options that adjust your assets over time to more conservative allocations as your beneficiary nears college age, and ten individual portfolios, including a socially responsible portfolio, from which you can select based on your own investment strategy and risk tolerance.
High account maximum
You can contribute for a beneficiary until the total balance of all accounts under all college savings plans sponsored by the Commonwealth of Pennsylvania under Section 529 held for the same beneficiary reaches $368,600. If more than one participant contributes for the beneficiary, this is the total allowed for all accounts.
Expert management
Recordkeeping services for the Investment Plan are provided by Upromise Investment Advisors, LLC, with investment management provided by Vanguard.
Tax benefits
The PA 529 Investment Plan offers numerous tax incentives that make it attractive to save money for college for a child, grandchild, other relative, or friend.
Federal income tax benefits. Your assets grow tax-deferred, and withdrawals are exempt from federal income tax when used for qualified higher education expenses.*
Additional advantages for Pennsylvania taxpayers. Your assets grow tax-deferred, and withdrawals are exempt from state income tax when used for qualified higher education expenses. For each beneficiary, residents may deduct up to $13,000 in contributions annually from their Pennsylvania state taxable income ($26,000 if married filing jointly, provided that each spouse has taxable income of $13,000).
Federal gift tax incentive. A special gift-tax exclusion allows you to make a $65,000 contribution ($130,000 if married filing jointly) for each beneficiary in a single year and treat it as though it were made over five years for tax purposes.** Gifts in excess of these amounts may be subject to federal gift tax. For more information about this incentive, consult a qualified tax advisor.
Other tax considerations
Consider the following before you open an account:
Your own state's plan may have additional tax benefits. If you or your designated beneficiary are a resident or taxpayer of another state, you should consider whether that state offers a 529 plan with tax advantages or other benefits that are not available through this plan. Be sure to weigh all the pros and cons of a particular plan before you choose it.
The plan does not give individual tax advice. The applicable federal, state, and local tax rules are complex; the effects of some of the rules are at present uncertain, and their application to any particular person may vary according to the facts and circumstances specific to that person. You should consult a qualified tax advisor.
* Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax. Nonqualified withdrawals may also be subject to state and local income tax. The availability of tax or other benefits may be contingent on meeting other requirements.
** In the event the donor does not survive the five-year period, a prorated amount will revert to the donor's taxable estate.
The guarantee is that, when used for qualified higher education expenses, your contributions will grow at the rate of tuition inflation at a Tuition Level that you choose. If the applicable GSP Credit Rate at the time a contribution is made has a premium, however, your rate of growth will be lower than the actual rate of tuition inflation at your Tuition Level by approximately the rate of the premium. Premiums do not, however, alter the way in which the dollar value of your account is determined. When used for qualified higher education expenses, each GSP Credit will still have the full value of the actual per credit tuition cost. The guarantee is an obligation of the Pennsylvania GSP Fund only. The guarantee is not backed by the full faith and credit of the Commonwealth of Pennsylvania, and is not an obligation of the Commonwealth of Pennsylvania, the Pennsylvania Treasury Department, Upromise Investments, Inc., Upromise Investment Advisors, LLC, or any other party. The GSP is not insured by the Federal Deposit Insurance Corporation or any other government agency.
The availability of tax or other benefits may be contingent on meeting other requirements. A withdrawal or a portion of a withdrawal not used to pay for qualified expenses may be subject to federal income tax and a 10 percent federal penalty tax, as well as state and local income taxes.
Before enrolling, consider whether the Account Owner's or Beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
For more information about the Pennsylvania College Savings Program—529 Investment Plan, download a Disclosure Statement or request one by calling 800-440-4000. Investment objectives, risks, charges, expenses, and other important information are included in the Disclosure Statement; read and consider it carefully before investing. The Pennsylvania Treasury Department serves as Distributor and Underwriter. If you are not a Pennsylvania taxpayer, consider before investing whether your or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.
The Pennsylvania College Savings Program—529 Investment Plan is authorized by the Commonwealth of Pennsylvania and administered by the Pennsylvania Treasury Department. Upromise Investment Advisors, LLC, serve as the Recordkeeping and Servicing Agent. The Vanguard Group, Inc., serves as Investment Manager for the Investment Plan. The Investment Plan’s portfolios, although they invest in mutual funds, are not mutual funds.
Investment returns are not guaranteed, and you could lose money by investing in the Investment Plan.
