ACHIEVE MONTANA AT A GLANCE
October 24, 2016
Posted By: Shaunescy
Achieve Montana is a 529 college savings plan designed specifically for tax benefits now, and college savings for the future. The program includes a variety of investment options to suit your individual goals so you can give your children the chance to explore all they want in life. Achieve Montana is administered by the Montana Board of Regents of Higher Education (Board). It offers many valuable advantages including tax-deferred growth, generous contribution limits, attractive investment options, and professional investment management.
Student Financial Services (SFS) is the area within the Commissioner of Higher Education’s Office that houses Achieve Montana. SFS provides students with the information and tools necessary to access and complete post-secondary education. SFS accomplishes its mission through administration of the Board’s mandated grant and scholarship programs as well as through financial literacy programs, financial aid awareness programs, and outreach programs. SFS also provides centralized default prevention and debt management services for Montana’s colleges and universities.
Partners in your college savings journey
The Board is pleased to expand its relationship with Ascensus College Savings and The Vanguard Group, Inc. (Vanguard), two leaders in investing and college savings. We are also pleased to announce the addition of two new investment managers - Dimensional Fund Advisors LP (DFA) and First National Bank of Omaha (FNBO), to the Achieve Montana investment management team.
The following lists important benefits for you and your beneficiaries:
Low minimums: You can open an account for as little as $25 and make additional contributions of
$25, or $15 with payroll deduction, where available.
High maximums: Contribute up to a total of $396,000 per beneficiary for accounts in all 529 Plans sponsored by the State of Montana (as of October 2015).
Competitive fees and expenses: Achieve Montana’s investment options have annual asset-based fees ranging from 0.67% to 0.83% (depending on which investments you choose). There is no annual account maintenance fee if you are a Montana resident, use an automatic investment plan (AIP), take advantage of payroll deduction through your employer, or maintain an account balance equal to or greater than $25,000. (A $25 annual account maintenance fee is charged otherwise.)
Range of investment options: Families have different investment goals, so Achieve Montana lets you choose from a variety of investment styles and asset classes, comprised of mutual funds and other investments from Vanguard, a leader in low cost mutual funds, mutual funds from DFA, an innovator in building investment solutions based on the science of capital markets, and an FDIC- insured savings option1 from FNBO.
Tax-deferred earnings: Your account earnings grow deferred from both federal and state taxes.
Federal and state tax-free qualified withdrawals: When your child is ready for college, you can withdraw the money from your Achieve Montana account free from federal and Montana state income taxes if the money is used to pay for qualified higher education expenses2.
Gift tax benefits: Your contributions also qualify for the federal $14,000 ($28,000 if married, making a proper election) annual gift exclusion.
Special tax benefits for Montana taxpayers: Contributions you make to Achieve Montana may be eligible as a yearly deduction of up to $3,000 per taxpayer per year ($6,000 for those married, filing jointly) from adjusted gross income in computing Montana state income tax. To be eligible, the contribution must be made to your account, an account owned by your spouse, or an account owned by your child or stepchild if your child or stepchild is a Montana resident3.
Estate planning benefits: Reduce your personal taxable estate by making five years’ worth of gifts to a beneficiary (up to $70,000; $140,000 if married, making a proper election) in one lump sum.
The savings portfolio invests 100% of its assets in a savings account at FNBO. The account is held in an omnibus savings account insured by the FDIC, which is held in trust by the Board at FNBO. Contributions to and earnings on the investments in the savings portfolio are insured by the FDIC on a pass-through basis to each account owner up to the maximum amount set by federal law, currently $250,000. The amount of FDIC insurance provided to an account owner is based on the total of: (a) the value of an account owner’s investment in the savings portfolio; and (b) the value of all other accounts held by the account owner at FNBO, as determined by FNBO and FDIC regulations.
Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
Eligible contributions are deductible in computing Montana adjusted gross income for the tax year in which they are made. Contributions may be subject to recapture in certain circumstances, such as a non-qualified withdrawal or a withdrawal or distribution from an account that was opened within three years prior to the date of the withdrawal or distribution (Recaptured Withdrawal). If the account owner is no longer a Montana resident at the time of a Recaptured Withdrawal, We may withhold the potential recapture tax from the Recaptured Withdrawal.
In the event the contributor does not survive the five-year period, a pro-rated amount will revert back to the contributor’s taxable estate.
HOW TO GET STARTED
Higher education is the key to helping children move toward their future dreams and goals. That’s why it is so important to start a plan now to save for tomorrow’s college costs. Take the first steps towards your dreams for your children.
Guide to getting started:
Go online to achievemontana.com and click on Enroll. The easy-to-follow directions will guide you through the enrollment process. Enrolling online is fast, convenient, and secure. If you prefer, you can complete and mail the physical Enrollment Form.
Opening an account:
Complete an Enrollment Form, which is a contract between you, as the account owner, and the Board, as trustee, establishing the obligations of each. The Enrollment Form cannot be processed if any of the required information is not provided. Achieve Montana has the sole discretion to determine whether an Enrollment Form is complete and accepted and whether your account has been opened.
You can open accounts for as many beneficiaries as you wish. You may also invest in any of the seven investment options for each account. Accounts may have only one account owner and cannot be held jointly. You also must complete a new Enrollment Form for each beneficiary.
To get started, you’ll need:
Your Social Security number
Your beneficiary’s Social Security number and date of birth
Your email address
Your bank checking or savings account number and routing number (if you want to contribute electronically via bank transfer)
If you prefer, you can mail the Enrollment Form with your initial contribution to the address below:
Client service representatives are available Monday - Friday, 7 a.m. to 6 p.m. Mountain time
P.O. Box 219448
Kansas City, MO 64121-9448
920 Main Street, Suite 900 Kansas City, MO 64105
FREQUENTLY ASKED QUESTIONS
Q: What is Achieve Montana?
Achieve Montana is a Qualified Tuition Program sponsored by the Montana Board of Regents of Higher Education (Board). Achieve Montana is designed to help individuals and families save for college in a tax-advantaged way and offers valuable advantages including tax-deferred growth, generous contribution limits, attractive investment options, and professional investment management.
Q: How does Achieve Montana work?
When you enroll in Achieve Montana, you choose to invest in at least one of three different investment approaches, based upon your investing preferences and risk tolerance.
One investment approach is the Age-Based Option where your money is moved automatically among different portfolios to progressively more conservative investments as your beneficiary approaches college age. There are five (5) Portfolios that comprise the Age-Based Option. These Portfolios invest in several underlying funds managed by The Vanguard Group, Inc. and Dimensional Fund Advisors LP.
The second investment approach is the Individual Portfolios Option, in which you can invest in the same portfolios that comprise the Age-Based Option but on an individual basis. Unlike the Age-Based Option, your investments do not change as the beneficiary ages, but, remain fixed over time.
The third investment approach is the Savings Portfolio Option. The Savings Portfolio invests in a Federal Deposit Insurance Corporation (FDIC) insured omnibus savings account held in trust by the Board at the First National Bank of Omaha.
All of the contributions made to your account grow tax deferred and distributions are free from federal and State income tax if used for qualified higher education expenses.
Q: What are the fees associated with Achieve Montana?
Achieve Montana charges annual asset-based fees ranging from 0.67% to 0.83% (depending on which investments you choose). In addition, an annual account maintenance fee of $25 is charged to each account. This fee is waived if you are a Montana resident, use an automatic investment plan, take advantage of payroll direct deposit through your employer, if available, or maintain an account balance equal to or greater than $25,000.
Q: Does Achieve Montana offer any tax benefits?
Yes. Achieve Montana offers both State and federal tax benefits, starting with tax-deferred earnings and a Montana state income tax deduction for eligible contributions made by Montana taxpayers1. Any earnings are State and federal income tax free when used toward qualified higher education expenses. Note that if you take a non-qualified distribution, any earnings are subject to federal and state income taxes and an additional 10% federal tax penalty (Distribution Tax)2.
Q: Who can open an account?
A U.S. citizen or resident alien, 18 or older, or an entity that is organized in the U.S., with a Social Security number or Tax Identification number and a valid permanent U.S. residential address, can open an Achieve Montana account, regardless of income level. Parents, grandparents, other family members, and friends can open an account for any person they choose.
Q: Who can be a beneficiary?
Any person of any age, with a Social Security number or Tax Identification number, can be named as beneficiary of an Achieve Montana account. As account owner, you can select a child, adult, or even yourself as beneficiary. If your beneficiary decides not to attend college or another qualified post- secondary institution, you can name another beneficiary who is a qualified member of the same family as the original beneficiary without incurring any penalties.
Q: Does my child have to attend college in Montana?
No. You can use the assets in your Achieve Montana account toward the costs of nearly any accredited public or private, 2- or 4-year college, or technical or vocational school nationwide. In fact, many U.S. colleges and universities now have campuses or locations outside of the country, where money from your Achieve Montana account can be used. It can also be used for nearly any graduate school, medical school, or law school meeting the above criteria. Please visit http://ope.ed.gov/accreditation/ for a complete list of qualified institutions.
Q: Can I change my Investment Options?
Yes. You may change your investment options up to two times per calendar year per beneficiary. If you have multiple investment options for a beneficiary, all changes for the calendar year for that beneficiary must be requested on the same day. You may also change investment options when you change the beneficiary of your account.
Q: Can I rollover money from another 529 Plan to Achieve Montana?
Yes. You may perform a federal income tax-free rollover from another 529 Plan into your Achieve Montana account for the same beneficiary once every 12 months. You may also perform a federal income tax-free rollover from another 529 Plan into your Achieve Montana account at any time when you change the beneficiary to a qualifying family member of the current beneficiary.
Q: What if my child does not go to college immediately after high school?
Achieve Montana does not require the beneficiary to attend college immediately after graduating high school. There are no time or age restrictions on when your beneficiary can use the money in your account to pay for qualified higher education expenses.
Q: What if I experience a financial hardship and need to withdraw the funds for a purpose other than college expenses?
You may request a distribution at any time. If the funds are not used for Qualified Expenses, the taxable party will be subject to federal and applicable state income taxes, plus the Distribution Tax on any earnings portion of the distribution. You, as the account owner, will be subject to recapture of any State income tax deduction previously taken on contributions to your account .
1 Achieve Montana account owners who are Montana residents are entitled up to a yearly $3,000 deduction to adjusted gross income per taxpayer, in computing their Montana State income tax, or $6,000 for those married, filing jointly, based on contributions to Achieve Montana.
Contributions to an Achieve Montana account are deductible from Montana state income tax for the tax year in which they are made. Contributions may be subject to recapture in certain circumstances, such as a non-qualified withdrawal or a withdrawal or distribution from an account that was opened within three years prior to the date of the withdrawal or distribution (Recaptured Withdrawal). If the account owner is no longer a Montana resident at the time of a Recaptured Withdrawal, the Program Manager or its service provider may withhold the potential recapture tax from the Recaptured Withdrawal.
2 Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state, and local taxes.
INFORMATION ON 529 PLANS
A Section 529 qualified tuition program (529 Plan) is a tax-advantaged savings program designed to help you save for college. You can use the assets held in your 529 Plan account to pay for your beneficiary’s tuition, fees, books, as well as certain room and board costs, not only in Montana, but at eligible schools anywhere around the country. Funds from a 529 Plan account can be used at eligible two- and four-year schools, trade and technical institutes, and even graduate schools. The 529 account owner has control over the account and how and when the assets are used.
What tax benefits does it offer?
Earnings grow tax deferred, so money has the opportunity to work harder
Qualified withdrawals are tax free
Some offer state-specific tax benefits: Montana offers a special tax benefit to Montana taxpayers
What can it be used for?
Qualified withdrawals are those used for qualified higher education expenses, including:
Required books and equipment
Certain room and board costs
Where can it be used?
Any eligible educational institution around the country, including:
2- or 4-year colleges and universities
Graduate schools (including law and medical schools)
Qualified career retraining schools
Who can open a 529 plan account?
Generally, any U.S. citizen or resident alien with a permanent U.S. address (not a P.O. Box number) (Note: many 529 plans have minimum age requirements to open an account, such as 18, in Montana)
Parents of a beneficiary, grandparents, other family members, or friends
An adult learner or GED graduate, for their own qualified continuing education or retraining
There is no income limit and no maximum age limit
Who can be a beneficiary?
Anyone with a Social Security number or Tax Identification number, who is a U.S. citizen or a legal resident alien.