You also can download, view and print the CollegeChoice CD FAQ.
CollegeChoice CD 529 Savings Plan FAQ
CD Options FAQ
Distributor FAQ
The CollegeChoice CD 529 Savings Plan
Capitalized terms not otherwise defined, have the same meaning as those terms defiined within the CollegeChoice CD Disclosure Statement.
What is the CollegeChoice CD 529 Savings Plan?
CollegeChoice CD 529 Savings Plan (CollegeChoice CD or the Plan) is a 529 plan offered by the Indiana Education Savings Authority (Authority) and managed by College Savings Bank (sometimes referred to as CSB or the Bank). CollegeChoice CD 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 and a variety of attractive FDIC-insured products from CSB. In addition, there are no income limits to open an Account or age limits to
be a Beneficiary.
How does CollegeChoice CD work?
When you enroll in CollegeChoice CD, you choose one or more CD Options that invest in one of three FDIC-insured products; the CollegeChoice CollegeSure® Certificate of Deposit (CD), CollegeChoice InvestorSure® CD or CollegeChoice Fixed Rate CDs, based upon your investing preferences and risk tolerance. Each CD product offers different terms and conditions, including rate of return and maturity. All of the contributions made to your Account grow tax-deferred and the distributions are federally and Indiana State tax-free if used for Qualified Expenses.*
How do I open an Account?
To open an Account, CollegeChoice CD must receive a completed Enrollment Form, which is a contract between you and the Authority establishing the obligations of each. You may enroll online or by mail. We cannot process the Enrollment Form if any of the required information is not provided. We have the sole discretion to determine whether an Enrollment Form is complete and accepted and whether the Account has been opened.
How many Accounts can I open?
You can open Accounts for as many Beneficiaries as you wish. You may also invest in any of the CD Options offered. Please keep in mind that each Account may have only one Account Owner and one Beneficiary and you must complete a new Enrollment Form for each different Beneficiary.
What are the fees associated with CollegeChoice CD?
CollegeChoice CD does not charge fees to Account Owners or Accounts for opening, maintaining, contributing to or taking withdrawals from an Account. We may charge fees or penalties for certain types of transactions, such as withdrawing CDs prior to maturity or changing Beneficiaries.
Can I open my Account through a financial advisor?
Yes. CollegeChoice CD has entered into agreements with various retail banks, broker/dealers and financial planners who can help you in making decisions regarding investments in CollegeChoice CD. If you use one of these financial professionals, you pay no commissions or fees. Any commissions are an expense of CSB and do not affect the amount of your contribution.
The Authority also administers the CollegeChoice Advisor 529 Savings Plan (CollegeChoice Advisor) that allows you to utilize the services of a financial advisor. Information about CollegeChoice Advisor is available at www.collegechoiceadvisor529.com or 1.866.485.9413.
Does CollegeChoice CD offer any tax benefits?
Yes. CollegeChoice CD offers both Indiana State and federal income tax benefits, starting with tax-deferred earnings and an Indiana State income tax credit for contributions made by Indiana taxpayers. The earnings portion of any distribution used to pay for Qualified Expenses are free from Indiana State and federal income tax.*
How does the State income tax credit work for CollegeChoice CD?
The State income tax credit is available only to Indiana taxpayers that made qualifying contributions to an Account in CollegeChoice CD. The tax credit is available to an individual filing a single return or a married couple filing a joint return. The amount of the credit is the lesser
of the following:
1. Twenty percent (20%) of the amount of the total contributions to the Plan during the taxable year by
the taxpayer;
2. One thousand dollars ($1,000); or
3. The amount of the taxpayer’s adjusted gross income tax liability for the taxable year reduced by the sum of all other credits allowed.
The State income tax credit is also available to contributors to the two other Qualified Tuition Programs offered by the Authority-CollegeChoice 529 Direct Savings Plan (CollegeChoice Direct) and CollegeChoice Advisor.
An Account Owner (who may or may not be the contributor) may be required to recapture the State income tax credit in certain circumstances.
Is my CollegeChoice CD Account guaranteed?
Although your CollegeChoice CD Account is not guaranteed, it is insured on a pass-through basis by the FDIC (Federal Deposit Insurance Corporation) up to the maximum amount set by federal law, currently $250,000. Under this insurance, your interest in the insurable balance of a CollegeSure CD, InvestorSure CD or Fixed Rate CD held pursuant to the Plan will be added to any other deposits you hold in the same right and capacity at the Bank and insured up to the maximum amount. Under applicable FDIC regulations, Accounts that have the same Account Owner will be deemed to be held in the same right and capacity and will be combined for purposes of the $250,000 limitation. Separate deposit insurance for Accounts with the same Account Owner and Beneficiary may also be available in certain limited circumstances. Please contact a Client Service Representative at 1.888.913.2885 for additional information.
Interest that accrues on a CollegeSure CD or Fixed Rate CD is also covered by FDIC deposit insurance, subject to these same limitations. The FDIC has taken the position, however, that payments similar to the Upside Payment on an InvestorSure CD are not subject to FDIC insurance until the CD matures.
How do I make contributions?
You may contribute to your Account in several ways including: checks, E-Check, direct deposit plan, payroll deduction (if your employer offers this service) or through a rollover distribution from another Qualified Tuition Program. Although there is a $250 minimum contribution before a CD will be issued, if you fund your Account with a direct deposit plan or by payroll deduction in amounts of at least $25, you can open your Account with an initial deposit of $25. CollegeChoice CD will hold your funds in an Accumulator Account until you reach $250.
Can I change my CD Options?
You may change your existing CD options one time per calendar year per Beneficiary. If you have multiple CD Options for a Beneficiary, all changes involving existing CD options for the calendar year for that Beneficiary must be requested on the same day. You may make additional contributions or enroll in new CD Options without limitation. Early Withdrawal Penalties may apply.
When can I enroll a newborn?
A newborn may be enrolled at any time. Keep in mind that you are required to submit the Beneficiary’s Social Security number on the Enrollment Form. You may also open an Account naming yourself as the Beneficiary in anticipation of the birth or adoption of a child.
Does my child have to attend college in Indiana?
No. You can use the assets in your Account toward the costs of nearly any public or private, two-year or four-year college in the U.S. or abroad, as long as the student is enrolled in a U.S.-accredited college, university 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 CollegeChoice CD Account can be used. Your Account can also be used for nearly any graduate school, medical school, or law school, among others, nationwide.
If I enroll in CollegeChoice CD, can I still apply for financial aid?
Yes. Participation in CollegeChoice CD does not limit a student’s receipt of merit-based financial aid, including academic or athletic scholarships. Like most investments, however, it may affect your ability to receive federal needs-based financial aid. Assets in a CollegeChoice CD Account are not considered when determining eligibility for Indiana financial aid programs.
What happens if my child receives a scholarship or grant?
There are several options you can choose from:
- Use assets in your Account to pay any tuition and required fees not covered by the scholarship or grant;
- Apply assets in your Account toward other Qualified Expenses such as certain room and board expenses
and books;
- Change the Beneficiary to another Member of the Family of the current Beneficiary;
- Keep any unused funds in your Account to pay for future Qualified Expenses, including graduate school; or
- Withdraw any unused funds up to the amount of the scholarship or grant without being subject to the 10% additional federal tax (Distribution Tax). Income taxes on earnings, however, will apply, any previously taken State income tax credit may have to be recaptured in certain circumstances and Early Withdrawal Penalties may apply.*
Can I change the Beneficiary of my Account?
Yes. You can transfer your Account to a Member of the Family of the Beneficiary without incurring taxes or penalties. Member of the Family currently includes: Child or Stepchild, Sibling, Stepsibling or Halfsibling, Parent or Stepparent, Grandparent, Grandchild, Niece or Nephew, Aunt or Uncle, First Cousin, Mother- or Father-in-law, Son- or Daughter-in-law, Brother- or Sister-in-law, Spouse of any individual listed (except first cousin).
What if my child does not go to college immediately after high school?
CollegeChoice CD does not require the child to attend college immediately after graduating from high school. There are no restrictions on when you can use your Account to pay for higher education expenses.
What if the Beneficiary or I move out of Indiana after I open an Account?
You can continue to contribute to your Account, and your Beneficiary can still use the Account to attend any Eligible Educational Institution. However, if you move out of State and no longer pay Indiana income tax, you will no longer be eligible to receive the Indiana State tax benefits.
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 (a Non-Qualified Distribution), federal and applicable state income taxes, plus the Distribution Tax, will apply to any earnings portion of your distribution. You must also repay all or part of any Indiana income tax credit you had previously taken on contributions to your Account. In addition, Early Withdrawal Penalties may apply.*
What if I already have a 529 plan? Can I transfer my Account to CollegeChoice CD?
Yes. CollegeChoice CD will accept a rollover of any account with another Qualified Tuition Program into CollegeChoice CD. There may be many benefits to moving your Account into the Plan. Foremost among these could be the impact on your Indiana taxes. If you are an Indiana taxpayer and have an Account in another Qualified Tuition Program in another state, you are not eligible to take the Indiana income tax credit for contributions to your Account. (All Qualified Tuition Programs offer the same federal tax benefits.) Please note that the State income tax credit is not available to Indiana taxpayers that make rollover contributions from another Qualified Tuition Program into CollegeChoice CD.
Please contact a Client Service Representative at 1.888.913.2885 for details. You should also contact the sponsor of your current Qualified Tuition Program for additional details on rolling over your Account. Please be aware that not all states permit direct rollovers from Qualified Tuition Programs. In addition, there may be state income tax consequences (and in some cases state-imposed penalties) resulting from a rollover out of another state’s Qualified Tuition Program.
Do my contributions to CollegeChoice CD qualify as a gift under federal law?
Yes. The Code provides that payments to an Account are completed gifts for federal gift tax purposes and are eligible for the applicable annual exclusion from gift and generation skipping transfer taxes ($13,000 for a single individual or $26,000 for a married couple making a proper election). Under certain conditions, you can contribute up to $65,000 immediately ($130,000 for married couples) and apply the contribution against the annual exclusion equally over a five-year period. Please consult your tax advisor for more information.**
What are the risks involved in investing in CollegeChoice CD?
As with any investment, there are risks involved in investing in CollegeChoice CD. To learn about the risks, please read and carefully consider Plan Risk Factors within the full CollegeChoice CD 529 Savings Plan Disclosure.
Does CollegeChoice offer any other 529 plans?
Yes. CollegeChoice offers two other 529 plans-CollegeChoice Direct, for those investing for college on their own, and CollegeChoice Advisor, for those investing for college with the help of a financial advisor. Those plans have different investment options, charges, sales commissions, penalties and risks than CollegeChoice CD. They are marketed separately from CollegeChoice CD.
To obtain more information about CollegeChoice Direct and CollegeChoice Advisor, visit the CollegeChoice website at www.collegechoiceplan.com.
* Earnings on nonqualified 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 and early withdrawal penalties. The availability of tax or other benefits may be contingent on meeting other requirements.
Contributions to a CollegeChoice CD account are eligible for a state income tax credit of 20%, up to $1,000 credit per year. This credit may be subject to recapture from the account owner (not the contributor) in certain circumstances, such as a rollover to another state’s qualified tuition program or a non-qualified withdrawal. The credit does not apply to rollovers from another state’s qualified tuition program. See the Disclosure Statement for additional details.
** In the event the donor does not survive the five-year period, a pro-rated amount will revert back to the donor's taxable estate.
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CD Options FAQ
CollegeChoice CollegeSure CD
How does the CollegeSure CD work?
The CollegeSure CD is a variable rate certificate of deposit that offers an annual percentage yield tied to college inflation, as measured
by the change in the College Board's Independent College 500® Index (IC 500®). It's backed by the full-faith and
credit of the U.S. Government up to $250,000 per contributor.
Contributions of as little as $250 purchase CollegeSure CDs. Direct deposit plans of as little
as $25 a month or $25 per pay period by payroll deduction will accrue interest in an Accumulator Account.
CDs will automatically be purchased each time your Accumulator balance reaches $250.
For each CollegeSure CD purchased you'll receive a confirmation notice. And, each
July 31 you will receive an annual statement detailing account balances, transactions
and earnings that occurred during the year.
What interest rate will I earn?
CollegeSure CDs pay interest annually on July 31st each year they remain outstanding. The interest rate is equal to the prior year’s college inflation rate as measured by the College Board’s Independent College 500 index change less an issue margin, and is subject to a maximum interest rate which is equal to the first year’s interest rate plus an interest rate cap. The interest rate on the CollegeSure CD is reset annually on July 31 based on the change in the IC500 index. The issue margin and the interest rate cap are determined on the contribution date.
For the past twenty-five years, the
annual college inflation rate
has ranged from a
high of 14.35% to a low of 4.15%. For the year ended July 31, 2011, the college
inflation rate was 4.36%.
How is the CollegeSure CD priced?
View the CollegeSure CD Pricing
webpage to see issue margins and interest rate caps, effective March 28, 2011.
Should the CD maturities coincide with anticipated attendance at college or
graduate school?
Yes. Maturities are available from 1 to 22 years. You should time your CDs to mature
the years your child attends college and/or graduate school. In most cases, CDs are
subject to Early Withdrawal Penalties for withdrawals prior to maturity.
Can others contribute to my child's account?
Yes. A person need not be an account owner to contribute to a child's account.
Must I select a college now?
No. You will not need to select a college, university or eligible trade school until you are ready to take a Qualified Distribution from your Account.
Is my money safe?
Yes. Principal and interest are backed by the full faith and credit of the U.S.
Government to at least $250,000 per depositor.
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CollegeChoice InvestorSure FAQ
How does the InvestorSure CD work?
The InvestorSure CD is a variable rate certificate of deposit indexed to the Standard
& Poor's® 500 Composite Stock Index (S&P 500®) and FDIC-insured up to $250,000 per contributor.
Unlike many investments, the InvestorSure CD does not risk
principal.
Should the value of the S&P 500 decline over the investment period, you will
receive your full investment back at maturity. Investments held to maturity will also
receive at least 70 percent of the average increase in the S&P 500 based upon a specific
formula. InvestorSure CDs are issued exclusively by College Savings Bank.
While historical rates of return are never a guarantee of future performance - if
the InvestorSure CD was available, the previous 80 maturing CDs (ending May 2008) would
have produced an average annual percentage yield (APY) of at least 5.40%.
Contributions of as little as $250 purchase an InvestorSure CD. Direct deposit plans of $25 a month or more or $25 per pay period will
accrue interest in an InvestorSure Accumulator Account. CDs will automatically be
purchased if your Accumulator balance exceeds $250 on a CD issue date. For each
InvestorSure CD purchased you'll receive a confirmation notice. And, each July 31
you will receive an annual statement detailing account balances and transactions that
occurred during the year. Account Owners will also receive quarterly statements after
October 31, January 31 and April 30.
What interest rate will I earn?
You'll earn an interest rate tied to the average increase in the S&P 500 and
based on a formula. The chart on the InvestorSure CD product page
illustrates the historical average annual percentage yield for each InvestorSure CD
issued during the time periods noted.
How is the InvestorSure CD priced?
Each InvestorSure CD pays a participation rate that is between 70-100% of the average
increase in the S&P 500 from issue date to maturity, based upon a specific formula. The
exact participation rate of each CD will not be determined until the day the CD is
issued. As an investor, you should assume that the rate is 70% when making your
investment decision.
What are my choices upon maturity?
We will provide written notification at
least 60 days before the Maturity Date. Thereafter, you must
provide written instructions at least 30 days prior to the Maturity
Date if you would like the proceeds upon maturity of
the InvestorSure CD to be invested other than in accordance
with the Default Actions described in this document. If you
provide us with instructions in good order, funds will be
disbursed from your Account no later than the first Exchange Business
Day following the Maturity Date.
If we do not receive instructions at maturity, we will take
one of the following default actions:
- If the Beneficiary will be 17 years of age or younger by
December 31 of the year in which the CD matures, we
will transfer the matured funds to a 1-year Fixed
Rate CD under the then current terms and conditions
for issuing Fixed Rate CDs;
- If the Beneficiary will be 18 years of age or older by
December 31 of the year in which the CD matures,
we will hold the matured funds in a Savings
Account until you provide distribution or other
investment instructions.
Alternatively, you may choose one of the following
options at maturity:
- Transfer the matured funds to a CollegeSure CD;
- Transfer the matured funds to a 1- or 3-year
Fixed Rate CD;
- Reinvest the matured funds in another InvestorSure CD
under the then current terms and conditions;
- Rollover the matured funds to another Qualified Tuition Program;
- Hold the matured funds in a Savings Account; or
- Take a Qualified or Non-Qualified Distribution
of the funds.
Please note that any actions other than taking a Qualified or
Non-Qualified Distribution or a default action stated above,
could be considered your once per calendar year investment
exchange.
Is my money safe?
Yes. Principal is backed by the full faith and credit of the U.S. Government up to
$250,000 per contributor.***
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CollegeChoice Fixed Rate CDs
How do Fixed Rate CDs work?
The College Savings Bank Fixed Rate CDs are offered with maturities of 1- and 3 years. They earn a fixed rate for the entire term of the CD, determined at the time the CD is opened. The rate will appear on your contribution confirmation along with the annual percentage yield (APY).
Contributions of as little as $250 purchase a Fized Rate CD. Direct deposit plans of $25 a month or more or $25 per pay period will
accrue interest in an Accumulator Account. Once the funds reach the $250 level, they are used to purchase a Fixed Rate CD.
What interest rate will I earn?
The APY is published online at www.collegesavings.com. Account Owners will receive the published interest rate cap on the Contribution Date. To lock in a posted interest rate, you must open and fund your Account online with a minimum investment of $250. If you prefer to mail in a check to fund the CD, the account will be opened at interest rate for the term selected on the Contribution Date.
Is my money safe?
Yes. Principal and interest are backed by the full faith and credit of the U.S.
Government up to $250,000 per contributor.***
*** The Federal Deposit Insurance Corporation (FDIC) generally insures, with respect to each FDIC-insured institution, deposit accounts that are held in the same right and capacity up to the maximum amount set by federal law, currently $250,000. An account owner's interest in the insurable balance of a CollegeChoice CD account is insured by the FDIC on a pass-through basis to each account owner up to the maximum amount. Under applicable FDIC regulations, accounts that have the same owner will be deemed to be held in the same right and capacity and will be combined for purposes of the $250,000 limitation. Interest that accrues on a Fixed Rate CD or CollegeSure CD is also covered by FDIC deposit insurance, subject to these same limitations. The FDIC has taken the position, however, that payments similar to the upside payment on an InvestorSure CD are not subject to FDIC insurance until the CD matures.
The CollegeChoice CD 529 Savings Plan is not insured by the State of Indiana. Neither the principal invested nor the investment return is guaranteed by the State of Indiana.
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Distributor FAQ
Who can distribute the CollegeChoice CD 529 Plan?
CollegeChoice CD can be offered to clients through participating financial institutions and financial advisors. After completing a contract or contract amendment with College Savings Bank, Program Manager to CollegeChoice CD, financial institutions and financial advisors will be enabled to offer the CollegeChoice CD 529 Savings Plan.
How do I contact the Plan or receive more information about the Plan?
If you are interested in offering CollegeChoice CD or would like to learn more about CollegeChoice CD, please contact Jason Thielman, VP of Business Development for College Savings Bank at 406-431-8236 or email jason.thielman@collegesavings.com .
Is there a commission structure involved for selling the Plan?
Financial institutions and financial advisors can receive between .25 and 4 percent per year in commission under an agreement with CollegeChoice CD.
Are there any fees?
There are no fees associated with selling the CollegeChoice CD 529 Savings Plan. In addition, your clients will not incur any enrollment fees, management charges or other expenses.
What are the college savings options available within the Plan?
Savings options available through the CollegeChoice CD 529 Savings Plan include:
The CollegeSure CD-Pays an annual percentage yield tied to the rate of college inflation as measured by the Independent College 500 IC 500® Index (IC 500).
The InvestorSure CD-Equity indexed and designed to benefit from market highs and protect against market lows.
Fixed Rate CDs-Offered with 1- and 3-year maturity options, earning a fixed rate of return for the entire term of the CD.
Is CollegeChoice CD associated with the CollegeChoice Advisor 529 Savings Plan?
CollegeChoice 529 college savings plans, sponsored by the State of Indiana, are specifically designed to help parents, grandparents, and others save for college and include the CollegeChoice CD 529 Savings Plan, the CollegeChoice 529 Direct Savings Plan and the CollegeChoice Advisor 529 Savings Plan. CollegeChoice CD is managed by College Savings Bank and offers both direct and advisor sold FDIC-insured savings options. CollegeChoice Advisor is managed by Upromise Investments, Inc. and is offered only through financial advisors.
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