We recognize that every investor has a different approach to investing — that's why CollegeBoundfund offers a wide variety of investment options. CollegeBoundfund portfolios invest in a mix of stock, bond and/or money market mutual funds managed by AllianceBernstein.
Special Gift and Estate Tax Treatment
CollegeBoundfund allows for a special gift tax exclusion. In general, you can contribute up to $70,000 ($140,000 for married couples) for each beneficiary in a single year without paying federal gift taxes, as long as you don't make any gifts to that beneficiary over a five year period. Also, the contributions you make to your CollegeBoundfund account are excluded from your taxable estate for federal estate tax purposes. Of course, you should consult your tax advisor or accountant to determine how your individual tax situation will be affected. The availability of such tax or other benefits may be conditioned on meeting certain requirements.
This hypothetical example assumes a one-time investment of $10,000 and a 7.5% annual rate of return. The tax rate is a blended federal and state capital gains rate of 24.45%. The annual turnover is assumed to be 21%.
This example does not represent the performance of any particular investment including CollegeBoundfund or any AllianceBernstein mutual fund. Of course, different assumptions will result in different outcomes than this example. Your results may be more or less. These figures do not reflect any management fees or expenses that would be paid by a 529 plan participant. Such costs would lower performance.
Assets grow tax-free, and withdrawals for qualified higher education expenses are also federal income-tax free. Qualified expenses include tuition, fees, room and board, books and other supplies required to attend an institution of higher education. A 10% federally mandated penalty or additional tax applies on any earnings you withdraw for non-qualified expenses. Please review the Program Description for more specific information. Additionally, Rhode Island residents receive the benefit of state income tax-free earnings growth.
Assets can be used to pay for qualified expenses at any accredited higher education institution in the U.S. This includes undergraduate and graduate schools, most community colleges and vocational tech schools..
Choose from a wide variety of investment options including Education Strategies Age-Based Portfolios, Education Strategies Fixed Allocation Portfolios, Stable Value Option and Individual Fund Portfolios.
It's easy to start investing immediately with a monthly contribution amount that meets your needs. In fact, as a Rhode Islander, you can open an account with as little as $1 per month or an initial investment of only $25. To participate in the monthly reallocation, the initial contribution to the account must be at least $1,000 and at least $500 must be reallocated each month to each other CollegeBoundfund investment option selected. The minimum contribution for Rhode Island accounts (and certain other accounts subject to the same sales and asset-based charge structure as applies to Rhode Island accounts) is only $25. Please see the Program Description for more information.
You can change the beneficiary of your account at any time to any other member of the former beneficiary’s family.
Rhode Island taxpayers who contribute to CollegeBoundfund can receive a state income tax deduction of up to $1,000 for married couples filing jointly and $500 for individual filers.
Contributions in excess of the annual limit can be carried forward and deducted in future years. If a participant makes a non-qualified withdrawal or a transfer/rollover to another state's program within two years after the deduction is taken, the amount of the deduction is "recaptured" and must be included in the participant's Rhode Island income.
Check with your tax advisor to see how 529 plans are treated for income tax purposes.
Designed to help Rhode Island families save for higher education, the Matching Grant Program provides eligible participants with matching funds when they open and contribute to their children’s CollegeBoundfund account.1
The CollegeBoundfund Academic Promise Scholarship is designed to recognize Rhode Island high school seniors who have the greatest need and have demonstrated academic achievement. The program makes a financial promise to the students, as long as they maintain their academic promise. Students are eligible for up to $2,500 per year over four years, up to a total of $10,000.
1. Matching grants rates are subject to availability of funds. If you qualify for this Program, a separate Matching Grant Account will be opened by Rhode Island Higher Education Assistance Authority (RIHEAA) naming your child as Beneficiary. RIHEAA is the Participant of the Account and the Account funds are maintained by RIHEAA for the Beneficiary. For more information about these Accounts, their qualification requirements and their investment selection, please see the Matching Grant Program Description or visit www.riheaa.org.