Scholars Choice operational specific FAQs
Corporate-Sponsored 529 plans / Corporate 529 accounts
Scholars Choice operational specific FAQs
What investment options are offered?
Enrollment Year Investment Portfolios — The enrollment year investment portfolios are divided into ten target portfolios that invest in multiple mutual funds, each of which has a different investment strategy. You may invest in the portfolio that corresponds to the beneficiary’s expected year of enrollment, or the one that best meets your varying investment objectives, risk profiles, and investment time horizons.
The further out the enrollment year (for younger designated beneficiaries, for example), the investment will seek a favorable long-term return by investing primarily in equities. While equities (i.e., stocks) typically have a higher level of risk, they may also have greater potential for returns than more conservative income-seeking securities (i.e., bonds). As the beneficiary's enrollment year approaches, the portfolio will automatically adjust to become more conservative. By enrollment time, a majority of assets will be in investments designed to be more conservative and lower-risk.
Target Allocation Portfolios — Four Target Allocation Portfolios are designed for investors who want to tailor their strategy based on their personal risk tolerance and goals. The portfolios span a continuum, ranging from lower-risk/lower reward potential — to higher-risk/higher reward potential. Each Target Allocation Portfolio invests in multiple underlying funds, and the Conservative Allocation Portfolio includes an investment in the Funding Agreement.
Individual Fund Portfolios — If you and your financial professional want to build your own portfolio — or complement another strategy by emphasizing a particular asset class — consider the Individual Fund Portfolios. Each portfolio invests 100% of its assets in a single underlying fund.
What is the initial deposit requirement for Scholars Choice Education Savings Plan?
The initial required minimum contribution is $25. This minimum contribution can be waived if a systematic recurring contribution (automatic funds transfer) is established when the account is opened. Subsequent minimum contribution is also $25.
How to enroll in electronic delivery of Scholars Choice documents?
Account owners may consent to electronic delivery of Quarterly Account Statements, Confirmations, Tax Form 1099-Q, and the Scholars Choice Plan Description depending on the recordkeeping platform your account has been set-up on. Regardless of the account owner’s chosen electronic delivery preference, these documents are viewable within Scholars Choice online account access. To establish electronic delivery, visit scholarschoice529.com and follow instructions to sign into your secure online account. Once signed into your online account, click “View Details” for a beneficiary and select “Profile & Documents,” then “Delivery Preferences” from the left hand navigation.
How can I view my clients' Scholars Choice Education Savings Plan 529 Account?
Client account information is accessible by logging in at 529QuickView.com. 529 QuickView is a free online tool that allows you to look up client account information, download reports, view historical prices, and more. Visit 529QuickView.com and click on “Learn more” for a PDF brochure that highlights the platform’s features.
Where can I obtain 529 specific forms?
529 forms are available on our Forms and Applications webpage at forms.scholars-choice.com.
What tools/calculators are available to help make 529 plan decisions?
The 529 tools listed below are available:
- 529 Savings Calculator
- 529 State Tax & Fee Comparison Calculator
- 529 College Savings Hypothetical Tool
What are the various ways to contribute to a Scholars Choice Education Savings Plan 529 Account?
There are several ways to contribute, as follows:
- Check made payable to Scholars Choice
- Recurring Contribution (Automatic Funds Transfer) from your registered bank account
- Payroll Direct Deposit
- Rollover from another 529 Plan
- Electronic Funds Transfer (EFT)
How can my clients participate in a crowdfunding/gifting program?
Ugift® - once Scholars Choice online account access has been established on your client’s 529 account, they may participate in the free crowdfunding/gifting service that invites their family and friends to celebrate important milestones with gift contributions to their Scholars Choice 529 account. Your clients will get one simple code (per 529 account) to share with everyone they would like to invite to contribute. This code never expires, and gift givers can easily manage multiple gift contributions. Gifting requests can also be posted on social media. To learn more, your clients can log into their secure Scholars Choice online account at scholarschoice529.com and click on Ugift®.
What types of fees and expenses are involved with investing in the Scholars Choice Education Savings Plan?
Fee and expense information can be found in the Scholars Choice Education Savings Plan Description, found here.
Why is the Scholars Choice Education Savings Plan Description important?
The Plan Description provides an overview of the key features, and detailed information about the Scholars Choice Education Savings Plan. You should review with your client the Plan Description and the accompanying Participation Agreement before opening an account on your client’s behalf.
How are financial professionals compensated?
Please refer to the Scholars Choice Financial Professional Product Guide for financial professional compensation and program fees and expenses.
Where can I find my client's contribution by mail coupon?
Financial professionals with FA Authority to transact on their client’s behalf can log in to 529 QuickView at 529QuickView.com, find their client’s 529 account by using the Account Search functionality, select the correct client account from the Account Search results screen, then click on Make a Contribution, select Mail a Check, click Next, and then Print Form. A window pops up with instructions, mailing information, and the contribution coupon on the bottom of the page.
How are refunds of tuition and other qualified expenses handled?
If the beneficiary of your client’s Scholars Choice Education Savings Plan account has received a refund from an educational institution for tuition, room & board, or any other qualified expense, that money can be reinvested into your client’s Scholars Choice Education Savings Plan account, without tax or penalty on the earnings, as long as they do so within 60 days of the date of the refund.
Additionally, that recontribution would be treated as a NAV purchase. From a principal and earnings standpoint, the entire amount of the recontribution would be treated as new money (i.e., goes back into the account all as principal).
You or your client can use the Scholars Choice “Additional Contribution Form” to recontribute tuition reimbursement checks. Fillable forms can be downloaded from our Forms and Applications webpage at forms.scholars-choice.com. (Important note to financial professionals with omnibus selling institutions that hold the Scholars Choice Education Savings Plan in Street Name: Contact your back office for instructions specific to your firm.)
What is First Step by CollegeInvest?
First Step by CollegeInvest is a program that gives every child born or adopted in the State of Colorado a $100 contribution to their Scholars Choice Education Savings Plan 529 account. The Colorado Legislature passed this law in May 2019 and the program runs for 20 years. The program is administered by CollegeInvest.
Who is eligible for First Step by CollegeInvest?
The one-time contribution is available for all children born or adopted in the State of Colorado which began on January 1, 2020. Children and their parent or guardian must be U.S citizens or resident aliens who have been assigned a social security number or federal tax identification number. The parent or legal guardian must be the account owner of a Scholars Choice Education Savings Plan account with the eligible child listed as the beneficiary and apply before the child’s fifth birthday.
How can Colorado Residents apply for First Step by CollegeInvest?
Colorado residents can apply online at collegeinvest.org/first-step. Once approved, they’ll receive a welcome email and the contribution will be deposited into the child’s account within 30 days. They will also need to provide their child’s official birth certificate or adoption documents, issued by the State of Colorado, and their Scholars Choice Education Savings Plan 529 account number.
Will there be any tax implications on contributions for First Step by CollegeInvest?
According to CollegeInvest, the contributions are treated as a scholarship; therefore, the recipients don’t pay taxes on it.
What are the tax benefits to Colorado residents?
Colorado is the home state of the Scholars Choice Education Savings Plan. Colorado state taxpayers enjoy an annual state income tax deduction to the extent of the contributor’s Colorado taxable income for that year on contributions to a Colorado 529 plan.
Do clients receive tax benefits if they purchase the Scholars Choice Plan and live in another state?
Depending on your client's state of residence, they may be able to deduct their contributions. Please refer to Understanding State Tax Deductions for more information.
Is there a penalty for a non-qualified withdrawal?
The earnings portion of non-qualified withdrawals is subject to federal and state taxes, at the beneficiary’s tax rate if applicable, plus an additional 10% federal tax. The withdrawal can only be made payable to the account owner or the beneficiary.
Corporate-Sponsored 529 Plans / Corporate 529 Accounts FAQs
What are the benefits of a corporate plan?
- Added education savings program benefit to employees at no cost to the employer.
- Plan can be set up as direct deposit from paycheck or a recurring contribution (automatic funds transfer) from employee's personal bank account.
- Employees own their individual accounts (i.e., they are “portable” if they leave the firm).
- Accounts in a corporate plan are eligible for Class A Units with a waiver of the initial sales charge or Class I Units.
- Minimum initial and subsequent contribution amounts are waived.
- Colorado residents are eligible for a state tax deduction on contributions to the plan.
- Variety of professionally managed investment portfolios for employees to choose from.
- Ongoing asset allocation adjustments, underlying fund selection and performance monitoring by the investment team.
- Scholars Choice is one of the largest financial professionally-sold 529 plans.
- Ease of signing up through an Enrollment Form and Payroll Direct Deposit Form.
How are contributions made to a corporate plan account?
The employer completes our Corporate-Sponsored Plan Authorization Agreement. For Colorado employers to be eligible for the employer tax credit, the employer needs to register on the CollegeInvest portal.
Once the corporate-sponsored 529 plan is established, how does an employee enroll?
An employee can enroll by completing the Company Account Application, and may elect to contribute by payroll direct deposit on the application form. For clients who already have a Scholars Choice account established and wish to contribute by payroll direct deposit, they can complete and submit the Payroll Direct Deposit form, or log in to their Scholars Choice account, click “Profile & Documents” and then click “Payroll Direct Deposit” for instructions.
How are contributions made to a corporate plan?
Since each employee establishes his/her own individual account, the employee has all of the contribution methods available as an account owner. Refer to the FAQ about making contributions to an account.
Is on-going maintenance work required at the employer level?
No additional work is required at the employer level.
How is the financial professional connected to all the employee accounts that are established?
The financial professional listed in the Corporate-Sponsored Plan Authorization Agreement will be automatically linked to all Scholars Choice accounts established for that employer and can be viewed by logging in to 529 QuickView at 529QuickView.com.
What investment options are available to employees?
Employees may select among any of the available investment portfolios offered by Scholars Choice.
What employee education pieces can be used?
Enrollment Brochure: This client-approved brochure discusses the benefits of 529 plans and briefly describes the features and investment options of the Scholars Choice Plan.
Plan Description: This legal disclosure document must be provided to the client prior to, or at the time of, the account opening.
What is a 529 plan?
A 529 plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996.
Who is Scholars Choice and CollegeInvest?
Scholars Choice Education Savings Plan is a financial-professional sold 529 plan administered by CollegeInvest, a division of the Colorado Department of Higher Education. TIAA-CREF Tuition Financing, Inc. is the plan manager, and Nuveen Securities, LLC is the distributor. Scholars Choice offers a diverse investment menu with investment portfolios that utilize underlying funds from Nuveen, TIAA, and other leading asset managers. Learn more about Scholars Choice.
Why recommend a 529 Plan to your clients?
- Tax advantaged growth
- Potential for state tax deductions
- Estate tax planning benefits
- Gift tax benefits unique to 529 plans
- Tax-free withdrawals on qualified education expenses
Learn more about Why Scholars Choice.
What are the primary benefits of a 529 plan?
- Transfer account balance from one beneficiary to another
- Fund selection, portfolio construction, asset allocation and performance monitoring for the plan
- Broad range of portfolio options
Who can be a beneficiary?
The beneficiary must be a U.S. citizen or resident alien with a valid social security number or other taxpayer ID number. The beneficiary doesn't have to be related to your client and doesn't have to live in the same state as your client or in the programs sponsor state. The account owner can also name themselves as beneficiary and use the money for their own education.
Who retains control of the money?
The account owner retains control of the account. Unlike certain other types of college savings vehicles, Scholars Choice allows your client to maintain ownership and control over their account. Only the account owner may make a withdrawal or complete other transactions, account elections and profile changes.
Who can be an account owner?
One of the many benefits of the Scholars Choice plan is its versatility. Any U.S. citizen or resident (plus residents of Puerto Rico, Guam and the U.S. Virgin Islands) with a valid social security number or tax identification number — can open accounts for the benefit of anyone. Your clients can even open an account for themselves and change the beneficiary at any time to a new beneficiary who is an eligible family member of the former beneficiary.
How can withdrawals be used?
Qualified withdrawals are intended to pay for qualified higher education expenses at an eligible educational institution that occurred after the account was initially established. Withdrawal requests should be submitted to Scholars Choice no later than December 31 of the calendar year that the expenses were paid/incurred. Withdrawals for your clients can be done using QuickView (529quickview.com).
Does a 529 plan affect financial aid?
Assets in accounts owned by a dependent student or one of their parents are considered parental assets on the FAFSA. When a school calculates the student's expected family contribution (EFC), a maximum of 5.64% of parental assets are counted. This is quite favorable compared to other student assets, which are counted at 20%. Higher EFC means less financial aid.
Being the account owner or beneficiary of an account may adversely affect the ability to receive financial aid or other benefits under government programs or from a school (consult with your clients about financial-aid eligibility).
Is financial aid impacted if the 529 plan is held by a grandparent or anyone else?
Due to the FAFSA Simplification Act of 2021, which will be in effect in the coming years, assets held in a 529 account owned by a grandparent, other relative or anyone else besides a dependent student or one of their parents will have no effect on the student's FAFSA-eligibility to receive financial aid. Prior to the Act, a student’s FAFSA would report a grandparent’s 529 plan withdrawals as the student’s income on a 2-year look-back basis.
What if the beneficiary does not attend college?
If the beneficiary does not attend college, the account owner can change the beneficiary to another member of the family (see below) or even take the money back.
Please note: Because there is no age or time restriction for Colorado-sponsored 529 Plans, the account owner can leave the money in the account in perpetuity.
- Eligible members of the family of the beneficiary
- Son, daughter, stepchild, foster child, adopted child or a descendant
- Son-in-law, daughter-in-law
- Siblings or step-siblings
- Brother-in-law, sister-in-law
- Father-in-law, mother-in-law
- Father or mother or ancestor or either, stepmother, stepfather
- Aunt, uncle or their spouse
- Niece, nephew or their spouse
- First cousin or their spouse
Can multiple people open separate accounts for the same beneficiary?
Yes. For example, a father, mother, grandparent, and uncle can each open a separate account for the same beneficiary and can also open separate accounts for other beneficiaries. However, all accounts for the benefit of the same beneficiary, in the same state-sponsored plan, are aggregated and cannot exceed the state’s maximum contribution limit. Please refer to the Plan Description for the maximum contribution limit.
What if the beneficiary gains a scholarship?
If the beneficiary receives a scholarship, money – up to the amount of the scholarship – can be withdrawn without the customary 10% federal penalty. However, ordinary income tax (at the distributee’s tax rate) is applied to the earnings portion of the distribution.
Can my clients have 529 plans in multiple states?
Yes. 529 plans have no state residency requirements. Your client can contribute to their in-state plan to capture a state tax deduction (if applicable). Your client may also hold multiple 529 accounts. For example, your client may open an in-state plan and contribute up to the amount of their home state tax deduction, and then open a Scholars Choice 529 account to invest additional money they would like to contribute toward education savings.