Scholars Choice 529 College Savings

Advisor FAQs

 

Transfer Agency Conversion FAQs

Will my clients’ Scholars Choice investment election change?

What level of service can be expected with the new transfer agency?

Are there tax implications for my clients to consider regarding this transition?

Where can I find more information about the transition?

Will my clients’ account number(s) be changing?

How can I access my clients’ Scholars Choice account(s)?

What if I already use 529 QuickView?

How do I register for 529 QuickView?

Who can I contact for 529 QuickView help?

If I currently use DAZL, will this change with the conversion?

Who can I contact for dealer services related inquiries?

Will the fax number for processing account-related paperwork change?

Will the mailing addresses change?

What happens if my client is enrolled in a payroll deduction plan through their employer?

Will this transition affect my clients’ recurring contribution via automatic funds transfer (AFT) from their bank account to their Scholars Choice 529 account?

What happens if my client is signed up for electronic delivery of Statements, Confirms, Tax Forms 1099Q, Program Disclosure Statement and Participation Agreement (PDS) and PDS Amendments?

Where can I download forms after June 10, 2019?

Will paperwork my client submitted during the conversion be processed?

How can my clients make a deposit to their Scholars Choice 529 account?

How can my clients request a withdrawal from their account?

How will the conversion affect my second quarter 12B-1 trail payment?

What number can I call if I have additional questions?

 

Glossary


General FAQs

 

What is a 529 plan?

A 529 plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996.

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Who is Scholars Choice?

Scholars Choice is an advisor sold plan established under the CollegeInvest Section 529 College Savings Program. The Scholars Choice 529 Plan is actively managed and monitored by our independent investment managers. To learn more about Scholars Choice, go to https://www.leggmason.com/en-us/products/about/scholars-choice.html.

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Why recommend a 529 Plan to your clients?

  • Tax advantage growth
  • State tax deductions
  • Estate planning benefits
  • Reduced gift tax
  • Tax-free withdrawals  

For additional information go to https://www.leggmason.com/en-us/advisor-resources/main/529.html

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What are the primary benefits of a 529 plan?

  • Flexibility
  • Transfer account balance from one beneficiary to another
  • Fund selection, portfolio construction, asset allocation and performance monitoring for the plan
  • Broad range of portfolio options

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What investment options are offered?

Automatic Allocations — We offer Age-Based and Years to Enrollment investment options. The asset allocation of these options is adjusted according to a predetermined schedule, gradually shifting from more aggressive in the early years to more conservative over time.

Age-Based — Allocation is determined based on the age of the beneficiary.

Years to Enrollment — Allocation is determined based on the number of years to the beneficiary’s enrollment date and cannot exceed 12 years.

Static Multi-Fund Allocations — In these investment options, the asset allocation will stay the same if the account owner remains invested. Choices range from aggressive to conservative:

  • All Equity
  • 80% Equity
  • Balanced 50/50
  • 80% Fixed Income
  • All Fixed Income
  • Cash Reserve

Individual Fund Options — If you want to build your own portfolio — or complement another strategy by emphasizing an asset class, consider our Individual Fund options (each of which invests 100% of its assets in a single underlying fund).

  • U.S. Aggressive Equity                                      
  • U.S. Core Equity
  • U.S. Small Cap Equity
  • International Equity
  • Global Fixed Income

For additional information, go to https://www.leggmason.com/en-us/products/529.html

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Who can be a beneficiary?

The beneficiary must be a U.S. citizen or resident alien with a valid Social Security number or other taxpayer ID number. The beneficiary doesn't have to be related to your client and doesn't have to live in the same state as your client or in the program’s sponsor state. The account owner can also name themselves as beneficiary and use the money for their own education.

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Who retains control of the money?

The account owner retains control of the account.  Unlike certain other types of college vehicles, Scholars Choice allows your client to maintain ownership and control over their account. The beneficiary of the account cannot make a withdrawal without the account owner's consent.

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Who can be an account owner?

One of the many benefits of the Scholars Choice 529 plan is its versatility. Any U.S. resident (plus residents of Puerto Rico, Guam and the U.S. Virgin Islands) — parents, grandparents, relatives, even friends of the family — can open accounts for the benefit of anyone. Your clients can even open an account for themselves and change the beneficiary at any time to another qualified family member.

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How can withdrawals be used?

Qualified withdrawals are intended to pay for qualified higher education expenses at an eligible education institution that occurred after the account was initially established. Reimbursement for qualified expenses should be submitted to Scholars Choice no later than December 31 of the calendar year that the expenses were paid/incurred.

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Does a 529 plan affect financial aid?

Assets in accounts owned by a dependent student or one of their parents are considered parental assets on the FAFSA. When a school calculates the student's expected family contribution (EFC), a maximum of 5.64% of parental assets are counted. This is quite favorable compared to other student assets, which are counted at 20%. Higher EFC means less financial aid.

Being the account owner or beneficiary of an account may adversely affect the ability to receive financial aid or other benefits under government programs or from a school (Consult with your clients about financial-aid eligibility.) 

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Is financial aid impacted if the 529 plan is held by a grandparent or anyone else?

Assets held in a 529 account owned by a grandparent, other relative or anyone else besides a dependent student or one of their parents will have no effect on the student's FAFSA-eligibility to receive financial aid.

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How are distributions by grandparents treated?

When a grandparent withdraws the funds to pay for their grandchild's college expenses, it will be counted as student income in a future year's FAFSA. (Currently, the FAFSA process has a 2-year look-back.) Student income is assessed at 50%, which means if a grandparent pays $3,000 of college costs it would reduce the student's eligibility for aid next year by $1,500. Remember, higher EFC means less financial aid.

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What if the beneficiary does not attend college?

If the beneficiary does not attend college, the account owner can change the Beneficiary to another member of the family (see below) or even take the money back.

Please note: Because there is no age or time restriction for Colorado-sponsored 529 Plans, the account owner can leave the money in the account in perpetuity.

Members of the Family

  • Spouse
  • Son, daughter, stepchild, foster child, adopted child or a descendant
  • Son-in-law, daughter-in-law
  • Siblings or step-siblings
  • Brother-in-law, sister-in-law
  • Father-in-law, mother-in-law
  • Father or mother or ancestor or either, stepmother, stepfather
  • Aunt, uncle or their spouse
  • Niece, nephew or their spouse
  • First cousin or their spouse

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Can multiple people open separate accounts for the same beneficiary?

Yes. For example, a father, mother, grandparent, and uncle can each open a separate account for the same beneficiary and can also open separate accounts for other beneficiaries.  However, all accounts for the benefit of the same beneficiary, in the same state-sponsored plan, are aggregated and cannot exceed the state’s maximum contribution limit. Please refer to the most recent Program Disclosure Statement (PDS) for the most up-to-date maximum aggregate balance limits. 

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What if the beneficiary gains a scholarship?

If the beneficiary receives a scholarship, money – up to the amount of the scholarship – can be withdrawn without the customary 10% federal penalty.  However, ordinary income tax (at the distributee’s tax rate) is applied to the earnings portion of the distribution.

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Can clients have 529 plans in multiple states?

Yes. All 529 college savings plans have no state residency requirements. The client can decide to contribute to their in-state plan to capture the state tax deduction (if applicable) for their in-state plan (e.g., NY).  If the client opens an in-state plan they can contribute up to the amount of their home state tax deduction, and then open a Scholars Choice account with the remainder of the money.See our Comparison Tool to compare different plans and their features.

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Plan Operational Specific FAQs

 

What is the initial deposit requirement?

The initial minimum contribution is $250 for all the Scholars Choice investment options. The minimum can be waived if a systematic automatic fund transfer is established when the account is opened.

Subsequent minimum contribution is as low as $50. This is waived if the account owner is a participant in a corporate employee plan.

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How do your clients enroll in electronic delivery of client documents?

Account owners at BNY-serviced firms may consent to electronic delivery of Quarterly Account Statements, Confirmations, Tax Form 1099-Q and the annual Program Disclosure Statement (PDS) and any PDS Amendments. Regardless of the account owner’s electronic delivery preference chosen, these documents will be viewable online by any client who has set up account access online.

To sign up for electronic delivery, account owners must visit www.scholars-choice.com/gopaperless and log into their online account (first-time users will need to create a user ID and password). Select “e-Delivery” under “Account Options” and choose from the four e-Delivery options (All documents may be delivered electronically, or some may continue to be delivered via U.S. Mail).

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How can I access my clients' Scholars Choice Plan accounts?

All client account information will now be available exclusively at www.529QuickView.com. 529 QuickView is a free online tool that allows you to look up client account information, download reports, view historical prices, and more.

Visit www.529QuickView.com and click on “Learn more” for a PDF brochure that highlights the platform’s features.

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Where can you obtain 529 specific forms?

For 529-specific forms for new account or existing accounts, please visit our Forms and Applications page.

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Are tools/calculators available to help make 529 plan decisions? 

The 59 tools listed below are available to you and your clients:  

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What are the various ways to contribute to Scholars Choice? 

A client can contribute several different ways:

  • Personal check made payable to Scholars Choice College Savings Program
  • Recurring Contribution (Automatic Funds Transfer)
  • Direct deposit or payroll deduction
  • Rollovers 
  • Electronic Purchase Service (EFT)

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What types of fees and expenses are involved with the plan?

Fees and expenses information can be found on pages 39-40 in the Scholars Choice Program Disclosure Statement.

 

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Why is the Program Disclosure Statement and Participation Agreement (PDS) important?

The PDS provides an overview of the key features, as well as detailed information about the Scholars Choice College Savings Program.  Before investing, you should read carefully and understand the more complete information contained in the PDS to make an informed investment choice.

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How are financial professionals compensated?

Please refer to the Advisor Guide for detailed display of financial professional compensation, fees and expenses.

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Where can I find my client's contribution by mail coupon?

Financial advisors that have FA Authority to transact on their client’s behalf can register/log in to 529 QuickView at www.529QuickView.com, find their client’s account by using the Account Search functionality, select the correct account from the Account Search results screen to view client account; then click on Make a Contribution, select Mail a Check, click Next, and then Print Form. A window pops up with instructions, mailing information, and the contribution coupon on the bottom of the page. 

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Tax FAQs

 

What are the tax benefits to Colorado residents?

Colorado is the home state of the Scholars Choice® College Savings Program. Colorado state taxpayers enjoy an annual state income tax deduction to the extent of the contributor’s Colorado taxable income for that year on contributions to a Colorado 529 plan.

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Do clients receive tax benefits if they purchase the Scholars Choice Plan and live in another state?

Depending on your client's state of residence, they may be able to deduct their contributions.  Please refer to Understanding State Tax Deductions for more information.  This document will provide a broad overview of tax limits and explains the terms tax parity, tax neutral and tax considerations.

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Is there a penalty for a non-qualified withdrawal?

The earnings portion of non-qualified withdrawals is subject to federal and state taxes, at the beneficiary’s tax rate if applicable, plus an additional 10% federal tax. The withdrawal can only be made payable to:

  • the account owner and sent to his/her address on record
  • to an address specified on a court order
  • to his/her bank of record.
  • the beneficiary

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Corporate-Sponsored 529 Plans / Corporate 529 Accounts FAQs

 

What are the benefits of a corporate plan?

  • Added benefit to employees at no cost to the employer.
  • Plan can be set up as direct deposit or a recurring contribution from employee's personal checking accounts.
  • Employees own their individual plans (i.e., are “portable” if they leave the firm).
  • Accounts are opened in Class O and are not subject to sales charges.
  • Minimum initial and subsequent contribution amounts are waived.
  • Colorado residents have potential for state tax deduction for contributions to the plan.
  • Variety of actively-managed investment options for employees to choose from.
  • Scholars Choice is one of the largest advisor-sold 529 plans at $4.1B and is ranked among the top advisor-sold 529 plans.

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How does an employer establish a corporate-sponsored 529 plan?

The employer completes our Corporate-Sponsored Plan Authorization Agreement.

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Once the corporate-sponsored 529 plan is established, how does an employee enroll?

It’s a paper-based enrollment process. Two forms are completed by the employee for enrollment – the Enrollment Form and Payroll Direct Deposit Form (if they would like to set up automatic withdrawals). 

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How are contributions made to a corporate plan?

Direct Deposit: A payroll Direct Deposit Form must be completed. Once the form is completed, the account owner will receive a Payroll Direct Deposit Confirmation Form, which must be signed and submitted to the account owners employers payroll department to process the direct deposit request.

Recurring Contributions (Automatic Funds Transfer): Recurring contribution instructions must be on file with Scholars Choice. Recurring Contribution instructions can be listed on the New Enrollment Form. After an account is open, Recurring Contribution instructions can be added by completing the Account Features Form.

 

(On the date and month indicated on the New Enrollment Form or Account Features Form, the specified dollar amount will be withdrawn from the employee’s personal bank account. It is the responsibility of the employee to ensure that sufficient funds are available on the specified day to enable the AFT to take place.)

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Is on-going work needed at the employer level?

No.

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How is the financial professional connected to all the employee accounts that are established?

The financial professional listed in the Corporate-Sponsored Plan Authoriziation Agreement will be automatically linked to any/all accounts established for that employer.

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What investment options are available to employees?

Employees would be invested in Class O (no load) units of the Scholars Choice Plan.  All the same investment options (Age-Based, Years-to-Enrollment, Static Multi-Fund, and Individual Funds) that are available in Class A and Class C are available in Class O. 

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What’s the fax number to send forms?

(617) 559-8940

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What employee education pieces can be used?

Enrollment Brochure: Compliance-approved for use with clients, this brochure discusses the benefits of 529 plans and briefly describes the features and investment options of the Scholars Choice Plan. 

Program Disclosure Statement: This legal disclosure document must be provided to the client prior to, or at the time of, the sale.

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What compensation does the financial professional receive?

Class O sales payout 75 bps upfront commission and an annualized 25 bps trail.  

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Transfer Agency Conversion FAQs
 

Will my clients’ Scholars Choice investment election change?

No, this action does not affect your clients’ investment election.

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What level of service can be expected with the new transfer agency?

Both financial advisors and account owners can expect minimal disruption, as well as the same levels of service and support as before. In some cases, additional services and functionality will be available. 

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Are there tax implications for my clients to consider regarding this transition?

There will be no tax implications regarding this transition.

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Where can I find more information about the transition?

The Scholars Choice website www.scholars-choice.com  will include updates about the transition as they are made.  Written materials will be also be mailed to clients before the June 10th conversion date.

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Will my clients’ account number(s) be changing?

Yes, client account numbers will be changing.

We will begin mailing account confirmations with new account numbers to clients on or about June 12, 2019.

Clients who currently have online account access will be asked to establish a new username and password when logging into their account for the first time on or after June 10, 2019. They can use their existing Scholars Choice 529 account number to register for new secure credentials. Once registered, they will be able to view their new Scholars Choice 529 account number. 

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How can I access my clients’ Scholars Choice account(s)?

All client account information will now be available exclusively at www.529Quickview.com. 529 QuickView is a free online tool that allows you to look up client account information, download reports, view historical prices, and more.

Visit www.529QuickView.com and click on “Learn more” for a PDF brochure that highlights the platform’s features.

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What if I already use 529 QuickView?

If you currently use 529 QuickView, then you will be able to view Scholars Choice accounts starting on June 10, 2019.

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How do I register for 529 QuickView?

Financial advisors who are new to 529 QuickView should refer to the 529QuickView guide for registration instructions, available at www.529QuickView.com

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Who can I contact for 529 QuickView help?

Contact 1-888-823-4348 to speak with a representative about 529QuickView. This service desk is available Monday to Friday from 8 am to 6 pm ET.

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If I currently use DAZL, will this change with the conversion?

Yes, DAZL will be discontinued with the conversion. If you require data downloads, beginning June 10, 2019, we encourage the use of 529 QuickView.

On 529 QuickView, you will be able to download reporting such as position and activity files, review commission data, look-up portfolio prices, and more.

Financial advisors who are new to 529 QuickView should refer to the 529QuickView guide for registration instructions, available at www.529QuickView.com.

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Who can I contact for dealer services related inquiries?

Contact Ascensus Dealer Services at 1-877-486-9279, Monday through Friday from 8 am to 4 pm ET or email dealerservices@ascensus.com.

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Will the fax number for processing account-related paperwork change?

Yes, the new fax number for processing account-related paperwork is 1-617-559-8940.

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Will the mailing addresses change?

Yes, the mailing addresses will change. See new overnight and regular mail addresses:

Regular Mail:

    Scholars Choice College Savings Program
    P.O. Box 219372
    Kansas City, MO  64121

Overnight Mail:

    Scholars Choice College Savings Program
    920 Main Street, Suite 900
    Kansas City, MO 64105

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What happens if my client is enrolled in a payroll deduction plan through their employer?

Your client(s) will receive instructions in the mail which will provide details and the steps required to update their payroll deduction direct deposit with their employer.

A new Payroll Direct Deposit Form must be completed and returned to your client’s payroll or HR department to update their payroll contribution records and continue with payroll-deducted contributions.

Your client may also update their payroll deduction information through their internal self-service portal, if available. 

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Will this transition affect my clients’ recurring contribution via automatic funds transfer (AFT) from their bank account to their Scholars Choice 529 account? 

No, your clients’ recurring contribution via automatic funds transfer (AFT) will not be affected. The instructions currently on file will be carried over to Ascensus.

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What happens if my client is signed up for electronic delivery of Statements, Confirms, Tax Forms 1099Q, Program Disclosure Statement and Participation Agreement (PDS) and PDS Amendments?

If your client previously elected e-Delivery, their preferences will be transferred to Ascensus. However, they will need to reauthenticate themselves the next time they login to www.scholars-choice.com/accountaccess in order to continue receiving document e-Delivery. 

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Where can I download forms after June 10, 2019?

All forms will be available at www.scholars-choice.com/forms

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Will paperwork my client submitted during the conversion be processed? 

Yes, all paperwork submitted prior to and during the conversion will be processed.

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How can my clients make a deposit to their Scholars Choice 529 account?

Account owners can initiate transactions www.scholars-choice.com/accountaccess or contact Scholars Choice at 1-888-5-SCHOLAR (1-888-572-4652).

Account owners can also submit a check made out to Scholars Choice, with their investment election and account number and mail to:

Regular Mail:

    Scholars Choice College Savings Program
    P.O. Box 219372
    Kansas City, MO  64121

Overnight Mail:

    Scholars Choice College Savings Program
    920 Main Street, Suite 900
    Kansas City, MO 64105

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How can my clients request a withdrawal from their account?

Account owners can initiate transactions www.scholars-choice.com/accountaccess or contact Scholars Choice at 1-888-5-SCHOLAR (1-888-572-4652).

Account owners can request a withdrawal by completing a withdrawal form and mailing it in. The withdrawal form can be found on our website at www.scholars-choice.com/forms.

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How will the conversion affect my second quarter 12B-1 trail payment?

You will receive two 12B-1 trail payments to cover the second quarter of 2019.

On or about June 10, 2019, BNY will make payment for the date range of April 1, 2019 through June 6, 2019.

Ascensus will make payment for the date range of June 7, 2019 through June 30, 2019 and will follow the normal commission payout timeline.

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What number can I call if I have additional questions?

1-888-5-SCHOLAR (1-888-572-4652), Monday to Friday from 9 am to 10 pm ET or the Legg Mason Sales Desk at 1-800-544-4835, Monday to Friday from 8 am to 5 pm ET.

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Glossary

 

Accumulation Privilege (may also be referred to as Rights of Accumulation): The Accumulation Privilege allows an Account Owner to combine the current value of all units (including Class A, B, C and O Units) of Scholars Choice portfolios held in certain accounts owned by the Account Owner, the account owner’s spouse, and the account owner’s children under the age of 21 with the dollar amount of the account owner’s next purchase of class A units of a scholars choice portfolio for purposes of calculating the initial sales charge applicable to such next purchase. Please refer to the Scholars Choice Program Disclosure Statement for additional information, including information about the applicable initial sales charges.

Account Application” refers to the Scholars Choice College Savings Program Account Application.

Account Owner, “you” or “your” refers to the individual or entity signing the Account Application and opening an account.

Act refers to Title 23, Article 3.1, Part 3, Colorado Revised Statutes, as amended, which requires and authorizes the establishment of a college savings program to be developed and implemented by CollegeInvest as a Section 529 Program and which may include various plans, including the Program.

Age of Majority: Age of majority is the age at which a minor-owned account is no longer controlled by the parent/guardian. The minor becomes an “adult” in the eyes of his/her residential state. For Scholars Choice, it is the age at which a minor is eligible to become the account owner. At that time, the account is re-registered to the now adult and he/she will have control over the assets and all transactions. The parent/guardian will no longer have any rights to the assets or any inquiry or transaction capabilities.  The age of majority varies by state.

Age of UTMA/UGMA Termination: Age of termination is the age at which an UTMA/UGMA account is no longer controlled by the account’s custodian. For Scholars Choice, it is the age at which a minor is eligible to become the account owner on an account funded with UTMA/UGMA assets. At that time, the account is re-registered to the now adult, and he/she will have control over the assets and all transactions. The custodian will no longer have any rights to the assets or any inquiry or transaction capabilities.  The age of termination varies by state.

Annual Account Fee:  In May of each year, Scholars Choice will charge a $20 fee to an account (with respect to which neither the account owner nor beneficiary is a Colorado or Wyoming resident) if the account has less than $2,500 in assets as of the fee assessment date.

Automatic Funds Transfer (AFT): Automatic Funds Transfer is a method to move money from a customer’s personal bank account to Scholars Choice on an automatic schedule without manual intervention.

Beneficiary: A 529 Beneficiary is the person you identify on the account application as the person of the account whose qualified higher education expenses will be paid for from the account.

Code means the Internal Revenue Code of 1986, as amended.

CollegeInvest: CollegeInvest is a not-for-profit division of the Colorado Department of Higher Education. CollegeInvest is the issuer and administrator of various college savings plans, including, since 1999, Scholars Choice.

CollegeInvest Issued 529 Program: CollegeInvest is the issuer of four college savings plans: Stable Value Trust (managed by MetLife), Direct Portfolio College Savings Plan (managed by Ascensus), Smart Choice (managed by First Bank) and Scholars Choice (managed by Legg Mason). The Prepaid Tuition Plan was terminated on 11/1/13.

Corporate Authorization Agreement: The Corporate Authorization Agreement is an agreement between the selling firm and an employer (corporation) that permits the selling firm to offer Scholars Choice to its employees.

Corporate Employee Plan Accounts: A Corporate Employee Plan Account is an account that is opened by an employee who works for an employer that has entered into a Corporate Authorization Agreement with a firm to sell Scholars Choice. A Corporate Employee Plan Account provides benefits to the employee account owner, which include a waiver of the Annual Account Fee and investing in Unit Class O. To continue to receive the benefits of a Corporate Employee Plan Account, the employee must contribute through the appropriate contribution methods established under the Corporate Authorization Agreement.

Cost of Attendance: Most colleges annually publish an estimate of the cost to attend their college for one year. Generally, the cost of attendance includes all reasonable expenses including tuition, room and board, books, supplies and fees. It usually does not include personal expenses (such as clothing) or transportation to or from the student’s home.

Coverdell Education Savings Account: The IRS permits moving assets from a Coverdell Education Savings Account to a Scholars Choice account. Such a distribution is considered a qualifying distribution that is not subject to federal income tax. A Coverdell Education Savings Account is a tax-advantaged savings account that helps parents and students save for education expenses.

Direct Deposit: A contribution method available for Scholars Choice Corporate Employee Plan account owners in which the employer deducts an amount determined by the employee from the employee’s paycheck and electronically sends that amount as a contribution to one or more Scholars Choice accounts owned by the employee.

EE or I U.S. Savings Bond (Qualified U.S. Savings Bonds): The IRS permits a Scholars Choice account owner to redeem his/her EE or I U.S. Savings Bonds issued after 1989 and deposit the redeemed assets into a Scholars Choice account without having to pay tax on the interest portion of the redeemed savings bond at the time of the redemption.

Eligible Educational Institution: An eligible educational institution is a school in the United States and abroad that is eligible to participate in U.S. Department of Education student aid programs under the Higher Education Act (as in effect on 8/5/1997 and as amended). They include most community colleges, public and private four-year colleges, universities, graduate and post-graduate programs and certain proprietary and vocational schools. To determine if a school is eligible, go to www.fafsa.ed.gov.

Family Member means a member of the family, as defined in Code Section 529(e)(2).

Funds are mutual funds in which the portfolio assets may be invested from time to time and which are managed by the manager’s affiliates or other entities not affiliated with the manager. The manager recommends fund changes to CollegeInvest for its approval, if any, in accordance with the policy statement.

“In Good Order”: A phrase used to indicate that instructions received from an account owner are complete and accurate. Instructions that are “not in good order” will require clarification and may be rejected by Scholars Choice.

Investment Option Change: An investment option change is a method for account owners to remove Scholars Choice assets from one investment option and move the assets to another Scholars Choice investment option for the same beneficiary. As per IRS rules, an investment option change can only occur twice per calendar year.

Investment Options: An account owner can contribute to 13 different Scholars Choice investments. The Age-Based, Years to Enrollment, Static, and Individual fund investment options offered by Scholars Choice are composed of one or more underlying funds. The percentage of assets allocated to those underlying funds differs based on guidelines set by CollegeInvest.

For two options, Age-Based and Years to Enrollment, the allocations automatically change over time. For the remaining eleven investment options, All Equity, Equity 80%, Balanced 50/50, Fixed Income 80%, All Fixed Income, Cash Reserve, and the five Individual Fund Options, the allocations remain static. Assets are allocated to certain portfolios based on the investment option chosen.

Letter of Authorization (LOA): A letter of authorization is a document submitted to Scholars Choice by an advisor or account owner outlining specific requests. The LOA will contain different information based on the request but must be dated and signed.

Letter of Intent: A letter of intent allows an account owner to select an asset-level goal, and to pay an initial sales charge, if any, with respect to any Class A units purchased during a 13-month period calculated by treating all purchases of all units of the Scholars Choice portfolios during this period as having been made at the same time. The account may include purchases of all units of the Scholars Choice portfolios made in Scholars Choice accounts owned by the account owner, his/her spouse and children under the age of 21 as well as the current value of all units held in such accounts, toward attaining the chosen asset level goal. Units of the Scholars   Choice portfolios include Class A, B, C and O Units. Effective 9/12/11, Class B Units of the Scholars Choice portfolios are no longer available for purchase. Please refer to the Program Disclosure Statement for additional information.

Manager refers to QS Investors, LLC with respect to the provision of investment advisory services for the program and Legg Mason Investor Services, LLC with respect to the provision of marketing, distribution, administrative and recordkeeping services for the Program, or such other financial institution selected by CollegeInvest to provide services regarding the program.

Maximum Account Balance Limit: The maximum account balance limit is the dollar amount of assets for a specific beneficiary, after which point contributions will not be accepted for that beneficiary. For Scholars Choice, the maximum account balance limit is determined by aggregating balances for the same Beneficiary in all CollegeInvest accounts (including Prepaid Plan Trust Fund, Stable Value Plus, Scholars Choice and the CollegeInvest Direct Portfolio Plan). Any portion of a contribution (including rollovers) that exceeds the maximum account balance limit of $400,000 in aggregate for all accounts for the same beneficiary in any CollegeInvest-issued program will not be accepted and the return to the contributor may be considered a non-qualified withdrawal to the account owner. The amount over the limit is called an “excess” contribution. An account can reach the maximum account balance limit through market action (an increase in the unit price, or from the deposit of contributions.) Accounts can grow beyond the maximum limit without any penalties. The maximum account balance limit is based on contributions on behalf of a beneficiary regardless of the source (e.g., married couples with separate accounts for the same beneficiary cannot exceed $400,000).

Member of the Family:

  • Spouse
  • Son, daughter, stepchild, foster child, adopted child or a descendant
  • Son-in-law, daughter-in-law
  • Siblings or step-siblings
  • Brother-in-law, sister-in-law
  • Father-in-law, mother-in-law
  • Father or mother or ancestor or either, stepmother, stepfather
  • Aunt, uncle or their spouse
  • Niece, nephew or their spouse
  • First cousin or their spouse

Non-Qualified Withdrawal means a withdrawal from an account other than a qualified withdrawal.

"Payroll Deduction" Method (CLOSED IN 2004): A contribution method that was once offered as part of a Scholars Choice corporate employee plan. It was a process in which the employer deducted an amount determined by the employee from the employee’s paycheck and sent a file to Scholars Choice showing the deduction amount as a contribution to one or more Scholars Choice Accounts owned by the employee. Payroll deduction was not automated and is no longer offered for new corporate employee plans.

Qualified Higher Education Expenses: Qualified higher education expenses include: tuition, fees, books, supplies and equipment required for enrollment or attendance at an eligible educational institution. It also included room and board for students enrolled on at least a half-time basis in a degree or certificate program, subject to certain limitations.

Prepaid Tuition Plan: 529 prepaid tuition plans are authorized by Section 529 of the Internal Revenue Code and allow the account holder to purchase tuition credits at their present price even though they will not be used until a future year, when tuition costs will have most likely increased. Plans are state sponsored and only available in some states, but it is possible to participate in a prepaid tuition plan outside of the account holder's current state of residence.

Policy Statement refers to the Investment Policy Statement established by CollegeInvest. The Policy Statement sets forth the policies, objectives and guidelines that govern the investment of Trust assets.

Portfolio means one of the investment portfolios of the Trust.

Program Disclosure Statement means the Scholars Choice College Savings Program Disclosure Statement, as amended and supplemented from time to time.

Qualified Higher Education Expenses include (i) tuition, room and board (subject to certain limits), fees, books,supplies and equipment required for enrollment or attendance of the beneficiary at an eligible educational institution, and (ii) expenses for the purchase of computer or peripheral equipment (as defined in Section 168(i)(2)(B) of the Code), computer software (as defined in Section 197(e)(3)(B) of the Code), or Internet access and related services, if such equipment, software, or services are to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution, all within the meaning of Code Section 529(e)(3). Expenses for computer software designed for sports, games, or hobbies do not qualify as qualified higher education expenses u nless the software is predominantly educational in nature.

Qualified Withdrawal means a withdrawal from an account to pay the qualified higher education expenses of the beneficiary.

Registered Investment Advisor (RIA): A registered investment advisor is an individual that works with clients for investments. The RIA is paid a fee from his/her client for the advice the RIA provides.

Starter Check: A check issued by a bank for new checking accounts. Usually, the check is not pre-printed with the checking account owner(s) name or address. Starter checks are not accepted by Scholars Choice.

State refers to the State of Colorado.

Trust means the Scholars Choice College Savings Trust.  The accounts are part of the Trust, which is administered by CollegeInvest and held in the name of CollegeInvest on behalf and for the benefit of beneficiaries.

Units are units of interest in one or more of the Portfolios to which the assets in your Account are allocated.

Unit Class refers to the fee structure under which your account is established. Each Portfolio, other than an individual fund portfolio, consists of four unit classes, including Unit Class, A, Unit Class B, Unit Class C and Unit Class O, as more fully described in the Program Disclosure Statement. Individual fund portfolios consist of Unit Class A, Unit Class C and Unit Class O. Class B Units of the portfolios are no longer available for purchase by new and existing account owners. However, an account owner who is changing the investment option(s) for an account may transfer existing Class B units to Class B units of another portfolio, if available.

 

 

GET STARTED TODAY


Take three simple steps toward achieving your investment goals. 
Our products cover a variety of strategies for diverse investment needs.

 

STEP 1

Download our Scholars Choice Enrollment Form.

 

Please Note: A Scholars Choice New Account Application is not required to open accounts at the following firms: Ameriprise, Merrill Lynch, Morgan Stanley

STEP 2

Review the Scholars Choice investment options.

STEP 3

Send the completed forms to: 

Scholars Choice College Savings Program
P.O. Box 219372
Kansas City, MO 64121 

 

Please Note: Advisors should check with their Home Office to confirm Scholars Choice paperwork can be sent directly to us. Some Broker-Dealers require their Advisors to send the paperwork to the Home Office.

 

 

 

All investments involve risk, including loss of principal. Past performance is no guarantee of future results.

IMPORTANT INFORMATION: An investor should consider the Program's investment objectives, risks, charges and expenses before investing. The Program Disclosure Statement, which contains more information, should be read carefully before investing. If an investor and/or an investor's beneficiary are not Colorado taxpayers, they should consider before investing whether their home states offer 529 plans that provide state tax and other benefits benefits such as financial aid, scholarship funds, and protection from creditors that are only available to state taxpayers investing in such plans.

Investments in the Scholars Choice College Savings Program are not insured by the FDIC or any other government agency and are not deposits or other obligations of any depository institution.  Investments are not guaranteed by the State of Colorado, CollegeInvest, QS Investors, LLC, Legg Mason Investor Services, LLC, or Legg Mason, Inc., or its affiliates and are subject to risks, including loss of principal amount invested.

Legg Mason, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Scholars Choice® is a registered service mark of CollegeInvest. CollegeInvest and the CollegeInvest logo are registered trademarks.  Administered and issued by CollegeInvest, State of Colorado. QS Investors, LLC is the Investment Manager and Legg Mason Investor Services, LLC is the primary distributor of interests in the Program; together they serve as Manager of the Program.  QS Investors, LLC, ClearBridge Investments, LLC, Brandywine Global Investment Management, LLC, Western Asset Management Company, and Legg Mason Investor Services, LLC are Legg Mason, Inc. affiliates. Thornburg Investment Management, Inc. and Templeton Global Advisors Limited are not affiliated with Legg Mason, Inc.

Audited financial statements for the Scholars Choice® College Savings Program, including balance sheets, income statements, cash flow statements, and the Management's Discussion and Analysis (MDA), may be viewed at https://www.collegeinvest.org/about-us/financial-statements or a hard copy may be obtained by calling Scholars Choice at 1-888-572-4652.