NextGen Plan Overview and Benefits
Any U.S. citizen can open a NextGen account. So grandparents, parents, aunts, uncles and even family friends can establish accounts. There is no age restriction or income limitation.
Tax Advantages - Any earnings on NextGen investments have the potential to grow free from federal income taxes, allowing your account assets to potentially grow and accumulate faster than in taxable investment accounts.
Withdrawals from your accounts are free from federal income taxes if used to pay for qualified higher-education expenses1, including:
• Tuition
• Room and board2
• Books and required supplies
• Expenses related to special needs beneficiaries
• Computers, Internet services and related technology items (for calendar year 2010 only)
The earnings portion of withdrawals for nonqualified expenses will be subject to federal income tax plus an additional 10% penalty tax, and may be subject to state income taxes. The penalty tax is waived under some circumstances.
Control - The account owner ("participant") retains control of the account and can change beneficiaries to another family member of the current beneficiary at any time.3
A Choice of Investment Options - With the NextGen plan's menu of investment options, you have the flexibility to choose an investing strategy that makes sense for your individual situation. Whether you are investing for the future education of a newborn child or saving for your own graduate school needs, the NextGen plan offers a number of investment alternatives for you - from conservative to aggressive.
Low Investment Minimums - You can establish an account for as little as $50 a month using our automated funding
service or payroll deductions, if permitted by your employer. If not funding through one of these methods, the minimum initial investment is $250.
Flexibility - Assets in your NextGen account can be used at any accredited post-secondary school in the U.S.4
and can be used to pay for tuition and fees, room and board, books, required supplies and equipment, as well
as expenses related to special needs beneficiaries.
Please remember there's always the potential of losing money when you invest in securities.
1 To be eligible for the favorable tax treatment afforded to any earning portion of withdrawals from Section 529 accounts, withdrawals must be for “qualified higher-education expenses”, as defined in the Internal Revenue Code.
2 The beneficiary must be attending an accredited institution at least half time for room and board to be considered an eligible expense.
3 Subject to certain restrictions.
4 Institutions must be eligible to participate in federal student financial-aid
programs. Some foreign institutions are also eligible.
