OVERVIEW

Use Your Savings at Certain Schools in the U.S. and Abroad

You can use your Texas College Savings Plan account to pay for qualified higher education expenses, Close X Qualified Higher Education Expenses:  Undergraduate and graduate tuition, fees, books, supplies, and equipment required for a Beneficiary's enrollment or attendance at an Eligible Educational Institution. The term includes computers and peripherals, software (except for non-educational sports, games, or hobby software), and internet service if used primarily by the Beneficiary while enrolled at an Eligible Educational Institution. Expenses for special needs services incurred in connection with enrollment or attendance at an Eligible Educational Institution are also included in the definition. The term also includes reasonable room and board for beneficiaries who are enrolled at least half-time at an Eligible Educational Institution.

Qualifying expenses also include fees, books, supplies, and equipment necessary to participate in a registered apprenticeship program, and up to $10,000 (lifetime per student) can be used to repay student loans for the Beneficiary or the Beneficiary's sibling. Additionally, 529 Plans may be used for K-12 tuition for private, public, or religious school (up to $10,000 per year per Beneficiary).

The tax consequences of using 529 Plans for elementary or secondary education tuition expenses will vary depending on state law and may include recapture of tax deductions received from the original state as well as penalties. You should consider consulting with a tax or legal advisor to determine any such consequences. at most accredited institutions in the U.S., including vocational schools, two-year and four-year colleges and universities, graduate schools, and some foreign institutions.

Choose Your Beneficiary

Put money away for future qualified higher education expenses Close X Qualified Higher Education Expenses:  Undergraduate and graduate tuition, fees, books, supplies, and equipment required for a Beneficiary's enrollment or attendance at an Eligible Educational Institution. The term includes computers and peripherals, software (except for non-educational sports, games, or hobby software), and internet service if used primarily by the Beneficiary while enrolled at an Eligible Educational Institution. Expenses for special needs services incurred in connection with enrollment or attendance at an Eligible Educational Institution are also included in the definition. The term also includes reasonable room and board for beneficiaries who are enrolled at least half-time at an Eligible Educational Institution.

Qualifying expenses also include fees, books, supplies, and equipment necessary to participate in a registered apprenticeship program, and up to $10,000 (lifetime per student) can be used to repay student loans for the Beneficiary or the Beneficiary's sibling. Additionally, 529 Plans may be used for K-12 tuition for private, public, or religious school (up to $10,000 per year per Beneficiary).

The tax consequences of using 529 Plans for elementary or secondary education tuition expenses will vary depending on state law and may include recapture of tax deductions received from the original state as well as penalties. You should consider consulting with a tax or legal advisor to determine any such consequences. — whether for your child, grandchild, relative, friend, spouse, or even yourself.

Control and Flexibility

Because the account Close X Account:  A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. is in your name, you retain control over when and how the savings are used. You decide when and how much to contribute and when to make withdrawals. You can even change beneficiaries among qualified family members without penalty. You should consult your tax advisor to determine whether this may create a taxable gift.

Scholarship Withdrawals

If the beneficiary Close X Beneficiary:  The individual identified by the Account Owner whose Qualified Higher Education Expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose Qualified Higher Education Expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.

A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. receives a scholarship, funds up to the amount of the tax-free scholarship may be withdrawn without penalty. Ordinary federal and any applicable state income tax would be owed on any investment earnings included in gross income.

Use Your 529 Account for K-12 Tuition, Student Loan Repayment, or Participation in a registered apprenticeship program

Under Section 529 Close X Section 529:  Section 529 of the Internal Revenue Code specifies the requirements for qualified tuition programs (529 Plans). of the Internal Revenue Code, assets in the Account Close X Account:  A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. can also be withdrawn on a tax-free basis for any of the following purposes:

1. Fees, books, supplies and equipment required for the participation of a designated beneficiary Close X Beneficiary:  The individual identified by the Account Owner whose Qualified Higher Education Expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose Qualified Higher Education Expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.
   
   A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. in a Registered Apprenticeship Program;
2. up to $10,000 per year of tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school as determined under applicable state law; and
3. up to $10,000 in amounts paid as principal or interest on any Qualified Education Loan of the designated beneficiary or a sibling of the designated beneficiary.

The $10,000 limitation for public, private, or religious schools applies on a per-student basis, rather than a per-account basis. Although an individual may be the designated beneficiary Close X Beneficiary:  The individual identified by the Account Owner whose Qualified Higher Education Expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose Qualified Higher Education Expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.

A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. of multiple accounts, that individual may receive a maximum of $10,000 in distributions free of federal tax per taxable year, regardless of whether the funds are distributed from multiple accounts. Similarly, the $10,000 aggregate limitation on Qualified Education Loan Repayments applies on a per-student basis regardless of whether the funds are distributed from multiple accounts.

Before making contributions or withdrawals from the Plan Close X Plan:  The Texas College Savings Plan, which is a 529 plan. for qualified expenses at K-12 Schools, Registered Apprenticeship Programs, or Qualified Education Loan Repayments, Account Owners Close X Account Owner:  The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. should consider that (i) the Investment Portfolios within the Plan were designed for college savers (e.g., persons saving for undergraduate and graduate school) not saving for qualified expenses at K-12 Schools, Registered Apprenticeship Programs, or Qualified Education Loan Repayments, and therefore Account Owner Close X Account Owner:  The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. should take into account their investment horizon, and (ii) the information presented is based on a good faith interpretation of the statutory language.

Recent tax reform legislation changes allowing for payment of K-12 tuition were on a federal level, and the tax consequences of using 529 plans Close X 529 Plan:  A 529 plan is an education savings plan operated by a state or an educational institution and designed to help families set aside funds for college. It is named after Section 529 of the internal revenue code, which authorized these types of tax-advantaged savings plans in 1996. Earnings on 529 plans are tax-free if used for qualified higher education expenses. (Unqualified withdrawals may be taxable as ordinary income and subject to a 10% federal tax penalty.) The Pension Protection Act of 2006 made the tax-free character of 529s a permanent part of federal law. for elementary or secondary education tuition expenses will vary depending on state law and may include recapture of tax deductions received from the original state as well as penalties. The account owner Close X Account Owner:  The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. should consult with a tax or legal advisor before using the plan Close X Plan:  The Texas College Savings Plan, which is a 529 plan. for K-12 tuition.

5823-NLD-6/18/2020