OVERVIEW

The Texas College Savings Plan® is a 529 plan sponsored by the state of Texas. State-sponsored 529 plans are tax-advantaged college savings plans authorized by Section 529 of the IRS code to encourage families to save for college. 529 plans are specifically designed to help families — regardless of income level — save for college by offering the potential for tax-free growth and withdrawals if used for qualified higher education expenses.

All U.S. citizens or permanent resident aliens 18 years of age or older with a valid social security number, regardless of income or state of residence, can participate in the Texas College Savings Plan.

Accounts can also be established by a corporation, partnership or trust; a state or local government, or tax-exempt organization described in Section 501(c)(3) of the Internal Revenue Code; or a custodian under a UGMA/ UTMA account.

WHY TCSP

No matter what your loved one aspires to be, the Texas College Savings Plan can help you save and plan for their higher education.

Low Investment Minimums and High Maximums

Open a Texas College Savings Plan account with as little as $25 and contribute up to $500,000 per beneficiary for all Texas 529 plans combined.

Simple to Start and Manage

Getting started with the Plan is easy. You can enroll online or send in an enrollment application. Either way, starting today is a good option. After your account is opened, you can review and manage the account online, including making changes to investment options twice per calendar year, and handling other routine tasks such as change of address or making contributions and withdrawals.

More Ways to Save

You can establish an account with an initial contribution of $25 or more and make subsequent contributions of $25 or more at any time. The Plan offers an automatic investment plan (AIP) that allows you to set up recurring contributions of $15 or more to your account.¹ Payroll deduction may also be available through your employer.

You choose the amount and frequency of contributions, and we take care of the rest.

Broad Range of Investment Options

The Plan lets you choose the path to planning for a bright future by offering numerous investment options based on your risk tolerance, time horizon, financial situation and other variables. It’s easy to find one that suits your particular needs.

Transparent Fees

There are no hidden fees. As stated in the current Plan Description and Savings Trust Agreement, total fees for the portfolios range from 0.60%-1.00%. Fees are subject to change.

¹Automatic investing does not assure a profit and does not protect against loss in declining markets. Before investing, investors should evaluate their long-term financial ability to participate in such a plan.

Features

Use Your Savings at Certain Schools in the U.S. and Abroad

You can use your Texas College Savings Plan account to pay for qualified higher education expenses at most accredited institutions in the U.S., including vocational schools, two-year and four-year colleges and universities, graduate schools, and some foreign institutions.

Choose Your Beneficiary

Put money away for future qualified higher education expenses — whether for your child, grandchild, relative, friend, spouse, or even yourself.

Control and Flexibility

Because the account is in your name, you retain control over when and how the savings are used. You decide when and how much to contribute and when to make withdrawals. You can even change beneficiaries among qualified family members without penalty. You should consult your tax advisor to determine whether this may create a taxable gift.

Scholarship Withdrawals

If the beneficiary receives a scholarship, funds up to the amount of the tax-free scholarship may be withdrawn without penalty. Ordinary federal and any applicable state income tax would be owed on any investment earnings included in gross income.

Tax Incentives

TAX INCENTIVES

The tax advantages of opening an account in the Texas College Savings Plan are available to any U.S. citizen or permanent resident alien 18 years of age or older with a valid social security number, regardless of income level, tax bracket or financial situation.

Tax-free Growth

Because earnings in 529 plans are not subject to federal tax and generally not subject to state tax when used for qualified higher education expenses, it can help your account grow. As the chart below shows, the tax advantages of a 529 plan could mean the difference between fully funding a higher education and coming up short.

taxfree
This hypothetical illustration assumes an initial investment of $10,000 and a 5% annual rate of return. The taxable account assumes a 28% federal tax rate. The illustration does not represent the performance of any specific account or investment and does not reflect any plan fees or sales charges that may apply. If such fees or sales charges had been taken into account, returns would have been lower.

Tax-free Withdrawal

You can withdraw funds in a 529 plan account to pay for qualified higher education expenses without incurring federal taxes. If the money is used for other non-qualified expenses, the earnings portion of the withdrawal is subject to ordinary federal tax and any applicable state taxes plus an additional 10% federal tax penalty unless you qualify for an exception to the penalty.

Gift Tax and Estate Tax Benefits

Gifts to 529 plans are partially exempt from the federal gift tax. For 2018, you can contribute up to $15,000 annually ($30,000 for married couples) per beneficiary, or up to $75,000 over a five-year period ($150,000 for married couples) per beneficiary, without triggering the gift tax.¹

Keep in mind that your gifts are excluded from your estate, so investing in a 529 plan can be a smart strategy to reduce your estate tax while helping to prepare your loved one for college.

¹If the account owner utilizes the special five-year lump sum exclusion and dies within five years of the funding date, the portion of the contribution allocable to the years remaining in the five-year period (beginning with the year after the account owner’s death) would be included in the account owner’s estate for federal estate tax purposes. Consult with your tax advisor for more information.