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Below, you can find answers to a few Frequently Asked Questions (FAQs). Please remember that detailed information regarding the answers to these questions, as well as the specifics of TAP 529 can be found in the Disclosure Statement.
I already have a 529 plan in another state.* Can I roll that over into TAP 529?
Yes. Pennsylvania will accept 529 rollovers from other states. Rollovers must occur within 60
days. Also, review the requirements of the state from which you want to roll over, as there
may be restrictions.
Click here for more information on rollovers, or contact a TAP 529 representative at 800 440-4000.
Can I move money in an UGMA or UTMA account into a TAP 529 Account?
Yes, but all the conditions of the UGMA/UTMA continue to apply. Also, the assets must be
liquidated and moved as cash into a TAP 529 Account. This may create a taxable event.
Can I roll over my Coverdell Educational Savings Account into a TAP 529 Account?
Yes. A tax-free rollover of a Coverdell Educational Savings Account (formerly an Education IRA)
into a TAP 529 Account is permitted. In order to do so, deposit the amount into your TAP
529 Account within the same tax year as you withdraw it from your Coverdell.
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Can I roll my savings bonds into my TAP 529 Account?
Federal law permits TAP 529 to accept a tax-advantaged rollover on some savings bonds
owned by some account owners. This must be done within the same tax year. Please call your tax advisor to see if you qualify.
If I invest in TAP 529, am I limited to ONLY public colleges in Pennsylvania?
No! TAP 529 can be used to pay for qualified higher education expenses at almost any public
or private institution in the United States and some schools in other countries. This includes
most colleges, universities, law or medical schools, community colleges and many career and
technical schools.
Does TAP 529 impact a student's eligibility for financial aid?
When it comes to financial aid, ANY assets that you or the Beneficiary possess can affect
your eligibility. But TAP 529 has important advantages over many other college savings vehicles.
With a TAP 529 Account — no matter which investment option you select — your account
is considered to be an asset of the account owner.
This means that, on average, about 5.6 percent of the value of the assets is considered in
determining the Expected Family Contributions (EFC).** The EFC is the amount the family of
the Beneficiary is expected to pay toward that Beneficiary's college education.
With many other savings vehicles, such as a custodial account or assets that are in the name
of the student, 35 percent of the value of the assets is considered in determining the EFC.**
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My child is in high school. Is it too late to open an account?
No, it is never too late to save for higher education. You may open an account for an individual
of any age. There are no restrictions in terms of when you can use a TAP 529 Investment Plan
Account. The Guaranteed Savings Plan account has approximately a one year waiting period,
but can be used for later years of higher education, for example the junior or senior years
of college.
I'm thinking of going back to school myself. Can I save for my own future?
Yes, an Account Owner can name him/herself as the Beneficiary, as long as the account owner
is 18 years of age or older. The TAP Account can be used for qualified higher education expenses
even if you decide to go to school later in life or if you choose to go back to school part-time.
What if my child (the Beneficiary in this case) wins a scholarship?
You can use the funds in your TAP 529 Account to pay for qualified expenses not covered by
the scholarship, or withdraw an amount equal to the scholarship without incurring a penalty.
In the latter case, income taxes on the earnings would apply.
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What if my child (the Beneficiary in this case) decides not to go to college?
You have several options. You can:
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Leave the assets in TAP 529. There are currently no age limitations so the Beneficiary may
be able to use the funds at a later date.
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Change the Beneficiary to a family member of the Beneficiary.
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Take money out of the plan as an "unqualified withdrawal" which will be subject to income
taxes and may be subject to additional penalties of 10 percent of the withdrawn earnings.
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Who qualifies as a family member of the Beneficiary? |
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A qualifying family member includes: |
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Natural or legally adopted children
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Parents or ancestors of parents
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Siblings or stepsiblings
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Stepchildren
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Stepparents
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First cousins
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Niece or nephew
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In-laws
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Aunts or uncles
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In addition, the spouse of the Beneficiary or the spouse of any of those mentioned above
also qualifies as a family member of the Beneficiary.
Can anyone contribute to a TAP 529 Account?
Yes. Although the account owner will retain control over the account, anyone—relatives,
friends and even the Beneficiary—may make contributions to the account.
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*If you are not a resident of Pennsylvania, you may want to investigate whether your state offers a plan with
additional tax advantages to its residents.
**Source: The Best Way to Save for College, Joseph F. Hurley, CPA, 2002/2003 edition.
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