When your child is little, the future is full of possibilities. Imagining everything they could become is exciting, but preparing for a future that is still taking shape can also feel overwhelming.
The good news is that you do not have to have everything figured out before you begin saving. The DC College Savings Plan can help you prepare for a wide range of educational goals, providing flexibility as your child grows.
This article is sponsored by the DC College Savings Plan.
A 529 plan gives you options
College is not the only path to success, and the DC College Savings Plan is not limited to one type of educational goal. Savings in a 529 account can be used for many qualified education expenses, helping you prepare for whatever path they choose.
Enjoy tax-free spending1 at any eligible school in the country and abroad.2 This includes tuition, room and board, books, computers, and more for K-12,3 two- and four-year colleges, graduate schools, vocational schools, and registered apprenticeships.4
And remember, it is never too late to invest in education. The DC College Savings Plan has no age limit, making it a flexible option for adults pursuing continuing education or career advancement as well.
Make the most of valuable tax advantages
In addition to flexibility, the DC College Savings Plan offers tax advantages that can help your dollar go further:
- Contributions have the potential to grow tax deferred.
- Withdrawals for qualified education expenses are tax-free.1
- DC residents may qualify for an income tax deduction of up to $8,000 for married couples or domestic partners filing jointly (up to $4,000 if filing individually), with separate accounts.
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Learn more about the DC College Savings Plan→
Start with what works for your family
You do not have to know today where your child will study or what they will pursue. The most important step is simply getting started. You can begin saving with just $25 and decide the details later.
If your child decides not to pursue higher education, or there are funds left over, you can transfer the account balance to an eligible family member5 or to yourself, rollover to a Roth IRA,6 or withdraw the money and pay applicable taxes and penalties.1
The future may still be taking shape, but you can start planning for it today.
Enroll online or learn more.
1Earnings 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 and recapture of DC tax deductions. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state, and local taxes.
2An eligible institution is one that can participate in federal financial aid programs.
3Up to $20,000 per year, per student at any K-12 public, private, or religious school.
4Expenses required for participation in a program registered and certified with the Secretary of Labor under the National Apprenticeship Act.
5 Section 529 of the Internal Revenue Code 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.
6529 account owners will be able to rollover savings from their 529 plan account into a Roth IRA without incurring any federal income tax or penalty. The Roth IRA must belong to the same beneficiary, and the lifetime rollover limit is $35,000. To be eligible, the 529 account must have been open for at least 15 years and the rollover amount must have been in the 529 account for 5 years. 529 to Roth IRA rollovers will also count toward annual Roth IRA contribution limits, but Roth IRA income limits do not apply for this type of contribution. State or District law treatment of a Roth IRA Rollover may differ from the federal tax treatment. District of Columbia law does not currently address the D.C. income tax consequences of a Roth IRA Rollover. As it currently stands, any rollover to a Roth IRA would subject claimed deductions to recapture, under D.C. Code § 47-4509(c), and the portion of the rollover that is attributable to account earnings will be subject to District of Columbia income taxation, under D.C. Code § 47-4509(f).
Before you invest, consider whether your or the beneficiary’s home state or district offers any state or district tax or other benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s or district’s qualified tuition program.
For more information about The DC College Savings Plan ("the Plan"), call 800-987-4859, or visit www.dccollegesavings.com to obtain a Program Disclosure Booklet, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.
The Plan is administered by the District of Columbia Office of the Chief Financial Officer, Office of Finance and Treasury. Ascensus College Savings Recordkeeping Services, LLC, the Program Manager, and its affiliates, have overall responsibility for the day-to-day operations including recordkeeping and administrative services. Ascensus Investment Advisors, LLC, serves as the Investment Manager.
The Plan's Portfolios invest in: (i) exchange-traded funds,(ii) mutual funds and (iii) a funding agreement. Investments in The Plan are municipal securities that will vary with market conditions. Investments are not guaranteed or insured by the Government of the District of Columbia, the District of Columbia College Savings Program Trust, the District of Columbia Chief Financial Officer, the District of Columbia Treasurer, the Trustee for the District of Columbia College Savings Program Trust or any co-fiduciary or instrumentality thereof, the Federal Deposit Insurance Corporation or any instrumentality thereof.
INVESTMENTS ARE NOT FDIC INSURED, MAY LOSE VALUE AND ARE NOT BANK GUARANTEED.
