MFESP FAQ
What is the Montana Family Education Savings Program?
What are the income tax advantages?
Is there a contribution limit?
Who can participate?
Can others contribute to my child's account?
What is an eligible educational institution?
Does my child have to attend full time?
What happens when my child is ready to attend college?
What if my child receives a scholarship?
What if my child does not attend college?
What is a nonqualified distribution?
What if I make a nonqualified withdrawal?
Can I change the account owner or beneficiary?
Can I also contribute to a Coverdell Education Savings
Account?
What about Hope and Lifetime Learning Credits?
How does this program affect financial aid?
Is this program guaranteed by the state?
How does this account affect estate tax?
Must I pay gift tax on the contribution?
Are there alternative investments available under the program?
Who may authorize a distribution?
What are qualified higher education expenses?
What is an eligible educational institution?
Can funds be mailed directly to an Educational
Institution?
What is a qualified rollover to another qualified tuition
program?
If I do not withdraw the entire balance of my maturing CDs and / or
Accumulator Account, how will the remaining funds be reinvested?
How will distributions be reported for tax purposes?
Will my distribution be subject to federal income tax?
Will my distribution be subject to a federal tax penalty?
Is my distribution subject to MT tax recapture?
Where can I find help with this form?
CollegeSure FAQ
How does the CollegeSure Plan work?
Are there enrollment fees?
What interest rate will I earn?
What is a full unit?
How is the CollegeSure CD priced?
Should the CD maturities coincide with anticipated attendance at
college or graduate school?
Must I select a college now?
What happens when my child is ready to attend college?
Is my money safe?
Can I obtain more than $250,000 of FDIC insurance
coverage?
Are there alternative investments available under the
program?
InvestorSure FAQ
How does the InvestorSure Plan work?
Are there enrollment fees?
What interest rate will I earn?
How is the InvestorSure CD priced?
What are my choices upon maturity?
Is my money safe?
Can I obtain more than $250,000 of FDIC insurance
coverage?
Are there alternative investments available under the
program?
MFESP FAQ
It's a tax-advantaged program created by the state of Montana to encourage families
to save for their children's higher education. The program was established as a
qualified tuition program under Section 529 of the Internal Revenue Code. The Board of
Regents (BOR) has contracted with College Savings Bank to serve as manager of the
program.
Your earnings grow tax free while you control the assets. When the time comes to use
the money for college, earnings distributed to pay qualified higher education expenses
are also 100% tax free.
Montana residents may deduct from Montana taxable income the amount of their
contributions up to $3,000 per year single/$6,000 per year married couples filing
jointly. Upon withdrawal from accounts opened at least three years, deductions are not
subject to recapture if the money is used to pay qualified higher education
expenses.
Yes. A contribution may not be made if it would cause the sum of all 529 accounts for
the same designated beneficiary to exceed the lesser of the balance limit, currently
set at $335,000 (as of 8/1/08), or the cost in current dollars of the qualified higher
education expenses that the account owner reasonably anticipates the designated
beneficiary will incur.
Any U.S. taxpayer, regardless of income, may establish a tax-favored college savings
account for anyone - including themselves.
Yes. A person need not be an account owner to contribute to a child's account.
However, Montana residents who make deductible contributions must establish their own
accounts (or jointly with spouse).
It is any institution eligible to participate in a student aid program administered by
the U.S. Department of Education. It includes virtually all accredited, public,
nonprofit and proprietary postsecondary educational institutions. To find out if a
specific institution is eligible, review the 2010/2011 Federal School Code database . If the institution has
been assigned a federal school code by the Department of Education, then it is
considered eligible under Section 529.
No. Funds can be used to pay for tuition, fees, textbooks, supplies and equipment that
are required for the designated beneficiary to attend an eligible institution. If the
student's enrollment qualifies for at least half-time, room and board expenses are
also eligible up to a specified level.
The account owner must submit a Distribution Authorization Form.
Funds up to the amount of a qualified scholarship can be returned to the account owner
without incurring the 10% federal tax penalty.
The account owner may either close the account or change the beneficiary. If the
account is closed, the funds are subject to a nonqualified distribution penalty in
addition to tax reporting.
Nonqualified distributions are withdrawals made for purposes other than for qualified
higher education expenses. Exceptions include withdrawals relating to the death or
permanent disability of the beneficiary.
The account owner may withdraw funds at any time. The account balance with earnings
will be refunded. However, this refund is subject to a federal nonqualified
distribution penalty equal to 10% of earnings. CD early redemption penalties may also
apply. Montana residents who deducted contributions from their taxable income may be
subject to tax recapture.
Yes. The account owner and beneficiary may be changed to certain other family members.
There is no fee for the first change of owner or beneficiary. Thereafter, a $50 fee may
be imposed for each change.
If your income qualifies to make a Coverdell ESA contribution you may contribute to
both the MFESP and a Coverdell ESA for the same beneficiary, in the same year. Amounts
may be withdrawn tax free from an ESA to make contributions to the MFESP.
Participation in the MFESP does not disqualify you from claiming the Hope and Lifetime
Learning Credits if you so choose.
Program assets will be considered if the student applies for state or federally
sponsored financial aid or scholarships. If the account is owned by the parent, account
balances are generally included in the asset of the parents rather than the student.
Beginning July 1, 2009, section 529 accounts owned by or for the sole benefit of the
student (such as custodial accounts) also will be treated as assets of the parents for
federal financial aid calculations. (As a result of a peculiarity in the Higher
Education Act of 2005, until July 1, 2009, student owned section 529 accounts (such as
in a custodial account) will not be treated as the student's or parent's assets
for financial aid purposes.) Section 529 account distributions that are not included in
taxable income are not treated as student or parent income for purposes of federal
financial aid calculations. An account owner should check the applicable rules for
financial aid programs and scholarship programs before withdrawing funds to pay
qualified higher education expenses.
Under Montana law, a student loan program, student grant program, or other financial
assistance program established or administered by the State of Montana or a financial
assistance program administered by a college or university supported by the State of
Montana must treat the balance in an account as an asset of the parent of the
designated beneficiary and not as a scholarship or grant or as an asset of the student
for determining a student's or parent's income, assets or financial need. However, this
rule does not apply if it is inconsistent with requirements of federal law or a
specific grant establishing a financial assistance program.
No. The program is not guaranteed by the State of Montana.
For purposes of federal estate tax, the value of an account generally will not be
treated as part of the taxable estate of an account owner who is not a designated
beneficiary.
No. Account owners can make annual gifts of up to $13,000 single and $26,000 joint to
a designated beneficiary for all accounts without incurring federal gift tax. For
contribution over the limit, you may treat the money (up $65,000) as having been made
ratably over a five-year period.
Yes. For more information call 800-888-2723 or visit our product page.
An Account Owner may seek to withdraw funds at any time. The designated beneficiary of
an account has no authority to withdraw funds from the account unless (a) the
designated beneficiary is also the Account Owner or (b) the account was established
under the Uniform Gifts (or Transfers) to Minors Act and the designated beneficiary is
of the age of majority.
Qualified expenses include tuition, fees, books, supplies and equipment that are
required for enrollment or attendance of the designated beneficiary at an eligible
educational institution. If the student's enrollment qualifies as at least half time,
room and board expenses are also qualified expenses up to a specified level.
Any college, university, vocational school or postsecondary institution eligible to
participate in a student aid program administered by the U.S. Department of Education.
It includes virtually all accredited public, nonprofit and proprietary (privately-owned
profit making) postsecondary institutions. If you'd like to find out if a specific
institution is eligible, please go to http://montana.collegesavings.com/ faq.html and
click on the 2008/2009 Federal School Code database link under "What is an eligible
educational institution?".
Many institutions require specific information from the Beneficiary in order to
properly credit the Beneficiary's account. Therefore, we do not mail checks directly to
Educational Institutions.
Federal tax law permits one tax-free rollover in any 12-month period from an account in
one qualified tuition program for a designated beneficiary to an account in another
qualified tuition program for the same designated beneficiary. To initiate a rollover
from your MFESP Account, please use the forms provided by the receiving institution. CD
redemptions prior to maturity may result in Bank-imposed penalties.
*See terms and conditions
*All remaining funds will require you to complete and submit an additional Distribution
Authorization Form at least 45 days prior to the date you require the funds.
Funds made payable to the account owner will generate a 1099Q in the account owner's
name and social security number. For UGMA accounts a 1099Q will be issued to the
beneficiary.
Distributions used to pay qualified higher education expenses are exempt from federal
income tax, however the portion of your distribution that constitutes earnings will be
included in taxable income if it is not used to pay qualified higher education expenses
or rolled over to another qualified tuition program (i.e. another section 529 program)
in a qualified rollover. Please refer to the Disclosure Statement for more
information.
The earnings portion of your distribution will be subject to a 10% federal penalty if
it is nonqualified. Distributions are nonqualified if they are not:
• used to pay qualified higher education expenses.
• rolled over to another qualified tuition program in a qualified rollover.
• made on account of death or disability of the designated beneficiary.
• made on account of a scholarship received by the designated beneficiary.
* Please read the MFESP disclosure statement for complete details on nonqualified
distributions.
Montana residents that claimed a Montana income tax deduction based on contributions to
the program will be subject to a Montana recapture tax on nonqualified withdrawals.
Withdrawals made within three years of opening the account, as well as rollovers to
other qualified tuition programs are also considered nonqualified for state tax
purposes.
You can call a college savings advisor any Monday through Friday from 9 a.m. to 6 p.m.
Eastern time at 1-800-888-2723, or e-mail questions to montana@collegesavings.com.
Additional forms as well as the most recent disclosure statement can be found online at
http:// montana.collegesavings.com.
CollegeSure FAQ
The CollegeSure CD is an affordable investment available through the Montana Family
Education Savings Program (MFESP). It's a certificate of deposit indexed to college
costs, guaranteed to meet future tuition, fees, room and board - and backed by the full
faith and credit of the U.S. Government to at least $250,000 per depositor.
Each year it pays an annual percentage yield tied to college inflation, as measured
by the change in the College Board's Independent College 500 (IC500) Index. It
allows you to prepay college costs today at a fraction of tomorrow's prices.
Note: The following changes were made to the CollegeSure CD Terms and Conditions, effective July 1, 2010:
- CollegeSure CDs will be available at 1 to 22 year maturities.
- CollegeSure CDs with maturities less than 4 years will have a 0% floor.
- CollegeSure CDs with maturities of 4 to 22 years will have a 2% floor.
Deposits of as little as $250 purchase CollegeSure CDs while direct deposits of as
little as $100 a month or $50 per pay period 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. Direct deposit customers will
also receive quarterly statements after October 31, January 31 and April 30.
Twice a year you'll receive a complimentary newsletter designed to help you make
the most of your account and keep you apprised of current college savings issues. (view previous newsletters)
No. There are no enrollment fees.
You'll earn an interest rate tied to the year-to-year increase in college costs.
The interest rate adjusts each July 31. The annual percentage yield (APY) over the term
of each CollegeSure CD is not less than the college inflation rate less a 4.00% margin
for CDs with maturities less than 4 years and a less a 3.00% margin for CDs with
maturities of 4 to 22 years. 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, 2010, the college inflation rate was 4.15%. (Historical
Interest Rates)
Units are simply a measure of how much college you have prepaid. One unit, at maturity
is equal to one full year's average tuition, fees, room and board at the average
four-year private college as measured by the IC500. Based upon 2005 data, .44 units
prepays about one year at the average public college (in-state). About 1.28 units
prepays one year at the average Ivy League college.
The purchase price exceeds the value of the IC 500 at the deposit date. For example,
the average cost for the first year of a private college as measured by the IC500 is
$40,408 for the academic year 2010/2011. You would deposit $62,642 on July 31, 2010 to
purchase 1 unit of the CollegeSure CD for your 3-year old child, in order to guarantee
the future cost of a private college in 15 years. At maturity you'll
receive 10% of one year of whatever private college costs are in fifteen years, no
matter how high college costs rise.
Yes. Maturities are available from 1 to 22 years. You must time your CDs to mature the
years your child attends college and/or graduate school. In most cases, CDs are subject
to early redemption penalties for withdrawals prior to maturity.
No. Simply begin making deposits and on each confirmation notice we'll report how
much college you've prepaid. If you'd like to target a specific college, just
call 1-800-888-2723 and we'll tell you approximately how many units you'll need
for that institution. But remember, participation in the MFESP does not guarantee
admission to any institution. Click here for a complete list of colleges in the
IC500.
The account owner must submit a Distribution Authorization Form.
Yes. Principal and interest are backed by the full faith and credit of the U.S.
Government to at least $250,000 per depositor.
Yes. A child with two parents and four grandparents can obtain up to $600,000 in FDIC
insurance with properly structured accounts (see Disclosure Statement for details). For
assistance, call 800-888-2723.
Yes. For more information call 800-888-2723 or visit our product page.
InvestorSure FAQ
The InvestorSure CD is a variable rate certificate of deposit indexed to the Standard
& Poor's 500 Composite Index and FDIC insured to at least $250,000 per depositor.
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 85 percent of the average increase in the S&P 500 based on a
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%.
Deposits of as little as $1,000 purchase InvestorSure CDs while mail in deposits of
as little as $500, direct deposits of $250 a month or more or $100 per pay period will
accrue interest in an InvestorSure Accumulator Account. CDs will automatically be
purchased if your Accumulator balance exceeds $1,000 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. Customers will also receive quarterly statements after
October 31, January 31 and April 30.
Twice a year you'll receive a complimentary newsletter designed to help you make
the most of your account and keep you apprised of current college savings issues. view previous newsletters
No. There are no enrollment fees.
You'll earn an interest rate tied to the average increase in the S&P500 and
based on a formula*. The chart on the InvestorSure page
illustrates the historical average annual percentage yield for each InvestorSure CD
issued during the time periods noted.
Each InvestorSure CD pays a participation rate that is between 85-100% of the average
increase in the S&P500 from issue date to maturity and based on a 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 85% when making your
investment decision.
College Savings Bank uses a complex formula to determine the participation rate and
it requires data only available on the day of issue. While the Bank will always
strive to offer the InvestorSure CD at 100% of the S&P500, it is not reasonable to
assume this can be done for every issuing of the CD.
The Bank will provide written notification to investors at least 60 days before the
Maturity Date. The Account Owner must provide the Bank written instructions at least 30
days prior to the Maturity Date if it desires the proceeds upon Maturity to be invested
other than in accordance with the default actions described below. If the Bank does not
receive such instructions, the Bank will take one of the following Default
Actions:
- If the beneficiary's date of entry into college is five years or more after the
Maturity Date, the Bank will transfer the matured funds to a new InvestorSure CD
issued under the then current terms and conditions for issuing InvestorSure CDs (if
the Bank is continuing to issue InvestorSure CDs under the Program);
- If the beneficiary's date of entry into college is more than one year and less
than five years after the Maturity Date and the Bank is still offering the
CollegeSure CD under the Program, the Bank will transfer the matured funds to a
CollegeSure CD with a maturity date of July 31 preceding the expected year of
matriculation under the then current terms and conditions applicable to CollegeSure
CDs; and
- If the beneficiary's date of entry into college is one year or less after the
Maturity Date (or neither of the two preceding options applies), the Bank will hold
the matured funds in an InvestorSure Accumulator Account until the funds are
required for qualified higher education expenses at an eligible educational
institution, or until the Account Owner is permitted to and does provide other
permitted investment instructions.
At Maturity, the matured funds will be applied using one of the Default Actions, unless
the account owner chooses one of the following pursuant to written instructions:
- Transfer the matured funds to a CollegeSure CD (if the Bank is continuing to
offer CollegeSureCDs under the Program)
- Re-invest the matured funds in another InvestorSure CD under the then current
terms and conditions (if the Bank is continuing to offer InvestorSure CDs under the
Program);
- Roll over the matured funds to another 529 plan investment;
- Hold the matured funds in the InvestorSure Accumulator Account; or
- Withdraw the funds.
Yes. Principal and interest are backed by the full faith and credit of the U.S.
Government to at least $250,000 per depositor.
Yes. A child with two parents and four grandparents can obtain up to $600,000 in FDIC
insurance with properly structured accounts (see Disclosure Statement
for details). For assistance, call 800-888-2723.
Yes. For more information call 800-888-2723 or visit our product page.