Grandparents can help with a 529 account

Learn about CollegeBound 529

Helping your grandchildren save for college

Contributing to a 529 plan is one way you can help your grandchildren get the education they need to succeed.

But just how expensive is a grandchild's college education?

Has it been a while since you've looked at college costs? Get ready for some campus sticker shock:

  • A grandchild's four years at a public university can average $80,000.1
  • Roughly 70% of graduating college seniors carry student loan debt.2
  • The average debt load per student is approaching $30,000, with that figure increasing annually.2

The more money that's saved up front for your grandchild's college education, means less debt when they graduate

Why grandparents may find 529 plans attractive

You have access to diversified investment options, with earnings that are generally exempt from federal income taxes and most state taxes if used to pay qualified education expenses.3

CollegeBound 529 has no minimum initial investment, so you can get started small if needed. For estate planning purposes, grandparents can contribute up to $15,000 annually per grandchild, or beneficiary, with no gift tax. That gift doubles to $30,000 if you are married and file your taxes jointly.

Need to make a larger contribution for estate-planning purposes? You can contribute up to $75,000 at one time, and elect to treat it as a five-year gift with no taxes.

The account owner, whether that's you or someone else, controls the money until ready to distribute to cover your grandchild's college education cost.

Additional materials/information

Source:, Frequently asked questions on gift taxes

1 Source:, Trends in College Pricing 2017

2 Source: The Institute for College Access & Success, October 2016

3 Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state, and local taxes. Rhode Island taxpayers who are account owners and contribute to CollegeBound 529 account are eligible for a deduction in computing state income tax for contributions made to CollegeBound 529 of up to $1,000 for married couples filing jointly and $500 for individual filers. Subject to certain conditions and requirements, 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 certain transfers /rollovers to another state's program, the amount of the deduction may be "recaptured" and included in the account owner's Rhode Island income. Check with your tax advisor to see how 529 plans are treated for income tax purposes.

Diversification does not guarantee a profit or eliminate the risk of loss.

None of the State of Rhode Island, its agencies, Invesco Distributors, Inc., Ascensus College Savings Recordkeeping Services, LLC, nor any of their applicable affiliates provide legal or tax advice. This information is provided for general educational purposes only and is not to be considered legal or tax advice. Investors should consult with their legal or tax advisors for personalized assistance, including information regarding any specific state law requirements.