General

CollegeBound Saver is a Section 529 plan offered by the Office of Rhode Island General Treasurer. Ascensus Broker Dealer Services, Inc. serves as the Program Manager. Ascensus Broker Dealer Services, Inc. and its affiliates (Ascensus College Savings) have overall responsibility for the day-to-day operations including investment advisory, recordkeeping and administrative services, and marketing. CollegeBound Saver 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.

When you enroll in CollegeBound Saver, you choose to invest in one or more of the available investment options, including an Age-Based Portfolio, the Target Risk Portfolios, and eight Individual Portfolios, based upon your investing preferences and risk tolerance. All of the contributions made to your account grow tax-deferred and the distributions are free from federal and Rhode Island state taxes if used for qualified higher education expenses.1

The easiest way is to enroll online. It only takes about 15 minutes. If you prefer to enroll by mail, complete the enrollment form and make an initial investment for the benefit of an individual (the beneficiary). You can open more than one account but each must be for a different beneficiary.

There are no investment minimums, so you can get started with whatever amount fits your budget. You can also establish recurring contributions from your bank account for any amount.3 More than one person can contribute to the same account until total market value reaches $395,000. After that, the account may continue to grow higher through investment earnings only.

CollegeBound Saver has no commissions, loads, or sales charges. The total annual asset-based fee varies from 0.04% to 0.85%, depending on the Portfolio you choose and your Rhode Island residency status.

Any U.S. citizen or resident alien, 18 or older, or an entity that is organized in the U.S., with a Social Security number and U.S. street address, 18 or older, can open a CollegeBound Saver account, regardless of income level. Parents, grandparents, other family, and friends can open an account for anyone they choose.

Any number of people can contribute to the same CollegeBound Saver account, but total assets cannot exceed $395,000 for all accounts for the same beneficiary in 529 plans sponsored by the State of Rhode Island.

Any person of any age (with a Social Security number) can be named as the beneficiary of a CollegeBound Saver account. As account owner, you can select a child, adult or even yourself as beneficiary. If a beneficiary decides not to attend college, you can name another beneficiary who is a qualified member of the same family as the original beneficiary. Please see the Program Description for more information on who qualifies.

Yes. As account owner you choose the portfolios in which you invest, as well as the distribution of the funds.

Yes. You can change the direction of your future contributions at any time. Federal law permits you to move the assets in your CollegeBound Saver account to a different mix of investment options twice per calendar year.

Yes. You can transfer your account to a member of the family of the beneficiary without incurring federal income tax or penalties.2

No. The beneficiary must have a Social Security number or taxpayer identification number, but you may name yourself as beneficiary and change the beneficiary to that child later on.

CollegeBound Saver permits a custodian for a minor under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act (UGMA/UTMA) to apply funds previously held in an UGMA/UTMA account to open an account in the Plan and to fund additional contributions to such an account, subject to the laws of the state under which the UGMA/UTMA account was established. Such a transfer of funds is generally a taxable event and you should consult with a tax advisor before transferring UGMA/UTMA assets to a 529 Plan.

Yes. You may perform a federal income tax-free rollover from another 529 plan into your CollegeBound Saver 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 CollegeBound Saver 529 account at any time when you change the beneficiary to a qualifying family member of the current beneficiary.

  • Electronic funds transfer from your checking or savings account
  • Recurring contributions with scheduled contributions in set amounts from your checking or savings account3
  • Payroll direct deposit3 through participating employers
  • Check (made payable to CollegeBound Saver)
  • Rollover from another 529 plan
  • Rollover from an Education Savings Account or a qualified Series EE or Series I U.S. Savings Bond
  • Transfer from an UGMA/UTMA account
  • Ugift
  • Upromise (minimum of $25)

Ugift is an innovative program that lets you leverage your social networks to invite family and friends to help you save for college. To learn more, visit Ugift529.com.

Ugift is a registered service mark of Ascensus Broker Dealer Services, Inc.

Upromise is a free to join rewards program that can turn every day purchases — from shopping online to dining out, from booking travel to buying groceries — into cash back for college. A percentage of your eligible spending will be deposited into your Upromise account. You can link your Upromise account to your eligible 529 account and have your college savings automatically transferred. Visit Upromise.com/collegeboundsaver to learn more and enroll.4

Taxes.

Earnings grow tax deferred and are free from federal income tax when used for qualified higher education expenses.1 Qualified higher education expenses include tuition, mandatory fees, books, supplies, computers, and equipment required for enrollment or attendance; certain room and board costs during any academic period the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student.

Yes. Rhode Island taxpayers who are account owners are eligible for a deduction in computing state income tax of up to $1,000 for married couples filing jointly and $500 for individual filers for contributions to their CollegeBound Saver account. Subject to certain conditions and requirements, contributions in excess of the annual limit can be carried forward and deducted in future years. If an account owner makes a non-qualified distribution or certain transfers or rollovers to another state’s program, the amount of the deduction may be "recaptured" and included in the account owner’s Rhode Island income.

Individuals can invest up to $14,000 ($28,000 for married couples) per beneficiary without assuming any gift-tax consequences. You can also contribute up to $70,000 per beneficiary in a single year ($140,000 for married couples) and take advantage of five years' worth of tax-free gifts at one time.5 (Contributions are considered completed gifts and are removed from your estate, but you, as the account owner, retain control.) Upon the death of the account owner, money remaining in the account will not be included in the account owner's estate for federal estate tax purposes. For more information, consult your tax advisor or estate-planning attorney.

Using the assets of your CollegeBound Saver account.

The money in your CollegeBound Saver account can be used for any purpose. However, to qualify for federal tax-free distributions and avoid penalties1, the money must be used for qualified higher education expenses for the beneficiary at an eligible educational institution.

Eligible expenses can include tuition, computers, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs during any academic period the beneficiary is enrolled at least half-time; toolkits for apprenticeship or cosmetology school; and certain expenses for a special-needs student.

No. Repayment of student loans is not considered a qualified higher education expense.

No. You can use the assets in your account toward the costs of nearly any public or private, 2-year or 4-year college nationwide, as long as the student is enrolled in a U.S.-accredited college, university, graduate school, or technical school that is eligible to participate in U.S. Department of Education student financial aid programs. In fact, many U.S. colleges and universities now have campuses or locations outside of the country, where money from your CollegeBound Saver account can be used.

CollegeBound Saver does not require the child to attend college immediately after graduating high school. There are no restrictions on when you can use your Account to pay for college expenses.

If the beneficiary decides not to go to college, you have three options:

  • Stay invested. You can leave the money in the account in case the beneficiary decides to attend school later. There is no age limit for using the money.
  • Change the beneficiary. You can change the beneficiary on your account at any time provided that the new beneficiary is an eligible Member of the Family of the former beneficiary. Please see the Program Description for more information on who qualifies.)
  • Withdraw the money for other uses. The earnings portion of a distribution not used for a beneficiary's qualified higher education expenses is subject to federal and state income taxes and may be subject to a 10% federal penalty tax. (For exceptions to this penalty, please see the Program Description.)

Additionally, any accumulated earnings that are withdrawn from your account must also be reported on the recipient's income tax return for the year in which they are withdrawn. Contact your tax advisor to determine how to report a non-qualified distribution.

529 plan assets are counted at different rates for the Expected Family Contribution (EFC) in the FAFSA formula. As of July 1, 2009, federal guidelines are as follows:

  • If the student is a dependent, a 529 plan account is considered as the parent's asset (if the account owner is the parent or the dependent student). As a result, it will generally be counted at a rate of only 3-6% of its value for the EFC.
  • If the student is not a dependent and is the account owner, the 529 plan account is treated as the student's asset and is generally factored into the EFC at the higher rate of 20%.
  • In other cases, the account does not count as an asset for federal financial aid purposes. (However, a student may have to report distributions received from the account as income for these purposes.)

Note: Financial aid programs offered by educational institutions and other non-federal sources may have their own guidelines for the treatment of 529 plan accounts. For complete information about financial aid eligibility, you should consult with a financial aid professional and/or the state or educational institution offering a particular financial aid program, since rules and regulations often change.

1Earnings on non-qualified distributions 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 distributions are subject to federal, state, and local taxes.

2Section 529 defines a family member as: a son, daughter, stepson or stepdaughter, or a descendant of any such person; a brother, sister, stepbrother, or stepsister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the father or mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; the spouse of the beneficiary or the spouse of any individual described above; or a first cousin of the beneficiary. Gift or generation-skipping transfer taxes may apply. Please consult with your tax advisor for further information.

3An investment plan of regular investment cannot assure a profit or protect against a loss in a declining market.

4Upromise is an optional service offered by Upromise, Inc., is separate from CollegeBound Saver, and is not affiliated with the Porgram Manager or the State of Rhode Island. Terms and conditions apply to the Upromise service. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. Transfers from Upromise to a CollegeBound Saver account are subject to a $25 minimum.

5In the event the donor does not survive the five-year period, a pro-rated amount will revert to the donor's taxable estate.