An Education Purchase Plan

An Education Purchase Plan

For

________________________________

Name of Dependent Child

________________________________

Name of IDA Participant

To be submitted to:

_______________________

Individual Development Account Program

Name __________________________________

Street __________________________________________

City __________State____ Zip_______

Phone__( )_____________________________________

Date _________________________________

Saving for Post-Secondary Education for a Dependent Child with Your Individual Development Account

When you complete all the requirements of the IDA Program and are ready to purchase your asset, your IDA savings and the matching funds you have earned will be deposited into a 529 College Savings Plan account.

The name “529” comes from the section number in the IRS code containing the rules for these tax-deferred savings accounts. Just as a 401(k) plan is for retirement savings, a 529 college savings plan is for college savings.

By federal law, all 529 college savings plans must be state sponsored. Residents of any state can invest in their own state’s or any other state's 529 Plan. You do not have to be a resident of a state to invest in that state's plan. However, there may be tax advantages available only to state residents for any particular state-sponsored plan.

Part One: Planning for your Child’s Education

1. What is a 529 Plan?

2. Choosing a Plan

3. Opening a 529 Plan

4. What Will College Cost in the Future?

5. My Plan to Save (after asset purchase)

Part Two: Supporting Documents

Part One: Planning for Your Child’s Education

1. What is a 529 Plan?

List 5 elements of a 529 College Savings Plan. In your list be sure to include things like tax advantages, how the money can be used, who can contribute to an account, who owns the account, and are there penalties for withdrawal of funds for non-educational uses. To find out more about 529 Savings Plans, go to: http://www.collegesavings.org/advantagesOf529.aspx.

1.) ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2.) ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3.) ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4.) ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5.) ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. Choosing a Plan

A 529 Plan is a state-sponsored investment program. That is, a state sets up the plan with an asset management company of its choice, and you open a 529 account with that asset management company. You, the parent, are the owner of the account, and the child for whom the account is set up is the beneficiary. The owner of the account does not deal directly with the state, but rather with the asset management/investment company. There can be variations in 529 Plans from state to state, so it is important to compare plans among states. Most states do not require residency in order to participate, so it is advisable to shop around different states for the best deal. Connecticut’s Plan is called CHET. Be sure to check Connecticut’s Plan, since residents of a state often get better tax advantages than non-residents. You can find out about CHET at www.aboutCHET.com.

Go to: http://www.collegesavings.org/planComparison.aspx to compare features of several state plans and write your answers on the following pages.

State Plan #1

Name of State: ___________________________________________________

Is there is residency requirement? (Do you have to live in that state to participate in their state plan?) ________________________________________________

Are there additional benefits if you ARE a resident of the state? ________________________________________________________________________________________________________________________________________________________________________________________________

Do you have to pay fees to open an account or maintain an account? ________________________________________________________________________________________________________________________________

What is the minimum initial contribution if any? ___________________________

What is the minimum subsequent contribution, if any? _____________________

What is the total maximum contribution? _______________________________

Can you contribute to the plan through payroll deduction? __________________

Can you change beneficiaries? _______________________________________

Are there penalties for early or non-authorized use of the money?

What are the investment options? ________________________________________________________________________________________________________________________________________________________________________________________________

Other features: ________________________________________________________________________________________________________________________________

State Plan #2