FAQs – Achieve Montana

Plan Today

Plan
Today

Frequently Asked Questions

Transition

What changes are happening to Achieve Montana?

We have some exciting changes coming to Achieve Montana effective April 24, 2020! Our Age-Based Investment Option is being transitioned to a Year of Enrollment Investment Option that features lower fees and a more gradual reduction in exposure to stocks. We are also adding two new Individual Portfolios – an Equity Index Portfolio that invests in the iShares Total US Stock Market Index Fund and a Bond Index Portfolio that invests in the Vanguard Total Bond Market Index ETF.

What fees are changing?

We are reducing our fees significantly as a result of the updates to our Investment Options. These fee reductions include reductions in underlying fund expenses as well as the service fee and state administrative fee. Effective April 24, 2020, asset based fees will range from 0.395% – 0.587%. That’s a decrease of as much as 29%!

ANNUALIZED ASSET-BASED FEES

ADDITIONAL EXPENSES

Portfolios

Estimated Annualized Underlying Fund Fee1

Annualized Service Fee2

Annualized State Administrative Fee3

Total Annual Asset-Based Fee4

Annual Account Maintenance Fee5

Year of Enrollment Option

2038 Enrollment Portfolio

0.046%

0.445%

0.095%

0.586%

$25

2035 Enrollment Portfolio

0.046%

0.445%

0.095%

0.586%

$25

2032 Enrollment Portfolio

0.044%

0.445%

0.095%

0.584%

$25

2029 Enrollment Portfolio

0.043%

0.445%

0.095%

0.583%

$25

2026 Enrollment Portfolio

0.042%

0.445%

0.095%

0.582%

$25

2023 Enrollment Portfolio

0.039%

0.445%

0.095%

0.579%

$25

College Portfolio

0.023%

0.445%

0.095%

0.563%

$25

Asset Allocation Option

Aggressive Portfolio

0.047%

0.445%

0.095%

0.587%

$25

Growth Portfolio

0.044%

0.445%

0.095%

0.584%

$25

Moderate Portfolio

0.043%

0.445%

0.095%

0.583%

$25

Conservative Portfolio

0.040%

0.445%

0.095%

0.580%

$25

Income Portfolio

0.023%

0.445%

0.095%

0.563%

$25

Individual Portfolios Option

Equity Index Portfolio

0.030%

0.445%

0.095%

0.570%

$25

Bond Index Portfolio

0.035%

0.445%

0.095%

0.575%

$25

Capital Preservation Portfolio

0.000%

0.395%

0.000%

0.395%

$25

Will I have to do anything as a result of these changes?

No. All changes will occur automatically. You may wish to talk with your financial advisor about the new investments enhancements.

Will the investment changes count towards my twice per calendar year investment option change limit?

No. This change does not count towards your twice per calendar year investment option change limit because it is being initiated by the Plan.

Can I continue contributing until the changes occur?

Absolutely! However, you will not be able to transact, make changes or open a new account between 2:00 p.m. MT on Thursday, April 23rd and 5:00 a.m. MT on Monday, April 27th.

How will the changes impact my account?
  • Age-Based Investment Option: On April 24th, 2020, accounts in the Age-Based Investment Option will automatically move to the Year of Enrollment Portfolio that correlates to the beneficiary’s date of birth as outlined in the chart below. Please refer to the Supplement for more details.

Beneficiary Date of Birth

New Year of Enrollment Portfolios

September 11, 2018-September 10, 2021

2038 Enrollment Portfolio

September 11, 2015-September 10, 2018

2035 Enrollment Portfolio

September 11, 2012-September 10, 2015

2032 Enrollment Portfolio

September 11, 2009-September 10, 2012

2029 Enrollment Portfolio

September 11, 2006-September 10, 2009

2026 Enrollment Portfolio

September 11, 2003-September 10, 2006

2023 Enrollment Portfolio

September 10, 2003 and before

College Portfolio

  • Individual Investment Options: On April 24th, 2020, if you are invested in one of our Individual Portfolios (Aggressive Portfolio, Growth Portfolio, Moderate Portfolio, Conservative Portfolio and Income Portfolio), you will remain invested in that Portfolio, but the underlying investments will change. These Portfolios will be called “Asset Allocation Portfolios” going forward. Please see the Supplement for more details.
  • Capital Preservation Portfolio: No changes will be made to the Capital Preservation Portfolio.
Will forms change and will the old forms still be accepted?

Forms will be updated to reflect the change to the Year of Enrollment Option and the addition of two new Individual Portfolios – the Equity Index Portfolio and the Bond Index Portfolio. Old forms will continue to be accepted, but we may reach out to you for clarification if needed. The most current forms will be available online at achievemontana.com/manage-accounts/forms-and-literature/. This change does not count towards your twice per calendar year investment option change limit because it is being initiated by the Plan.

General

What is Achieve Montana?

Achieve Montana is a 529 plan administered by the Montana Board of Regents of Higher Education (the trustee of the Montana Family Education Savings Trust). Achieve Montana offers special advantages including: tax-deferred growth, generous contribution limits, and professional investment management.

How do I open an Achieve Montana account?

The easiest way is to enroll online. It only takes about 10 minutes. If you prefer to enroll by mail, complete the Enrollment Form and make an initial investment for the benefit of an individual (the beneficiary). You must open a separate account for each beneficiary.

How does Achieve Montana work?

When you enroll in Achieve Montana, you choose to invest in one or more of nine different Investment Options, including the Year of Enrollment Option, five Asset Allocation Portfolios and three Individual Portfolios, based upon your investing preferences, time horizon and risk tolerance. All of the contributions made to your Account grow tax deferred and distributions are free from federal and state income tax if used for Qualified Expenses.1

How much do I need to open an account?

It only takes $25 to open an account (by check or electronic funds transfer), or $15 with payroll direct deposit if your employer offers that benefit. You can also make regular monthly, quarterly, semi-annual, or annual contributions (minimum of $25 per month) from your checking or savings account with an Automatic Investment Plan (AIP).2

The total balance of all accounts within Achieve Montana for the same beneficiary cannot exceed $396,000.

Who can open an Achieve Montana account?

A U.S. citizen or resident alien, 18 or older, or an entity that is organized in the U.S., with a Social Security number or Tax Identification number and a valid, permanent residential U.S. address can open an Achieve Montana account, regardless of income level. Parents, grandparents, other family members, and friends can open an account for any person they choose. You can also open an account to pay for your own higher education.

Can I change the beneficiary of my account?

Yes. You can transfer your account to a “member of the family” of the beneficiary without incurring federal income tax or penalties.3

Can I change my Investment Options?

Yes. You may change your investment options up to two times per calendar year per beneficiary. If you have multiple investment options for a beneficiary, all changes for the calendar year for that beneficiary must be requested on the same day. For more information on making changes to your Account, see the Program Description.

What is Ugift®?

Ugift is an innovative online feature that allows you to invite family and friends to celebrate special occasions with gift contributions to your Achieve Montana account.

What impact does a 529 plan have on eligibility for federal financial aid?

529 plan assets are counted at different rates for the Expected Family Contribution (EFC) in the FAFSA formula. Federal guidelines are as follows:

  • If the student is a dependent, a 529 plan account is considered as the parent’s asset (if the account owner is the parent or the dependent student). As a result, it will generally be counted at a rate only up to 5.64% of its value for the EFC.
  • If the student is not a dependent and is the account owner, the 529 plan account is treated as the student’s asset and is generally factored into the EFC at the higher rate of 20%.
  • In other cases, the account does not count as an asset for federal financial aid purposes. (However, a student may have to report distributions received from the account as income for these purposes).

Note: Financial aid programs offered by educational institutions and other non-federal sources may have their own guidelines for the treatment of 529 plan accounts. For complete information about financial aid eligibility, you should consult with a financial aid professional and/or the state or educational institution offering a particular financial aid program, since rules and regulations often change.

 

How many accounts can I open?

You can open accounts for as many beneficiaries as you wish by completing a new Enrollment Form for each Beneficiary. You may invest in any of the seven investment options for each account. Accounts opened beginning October 19, 2015 may have only one account owner and cannot be held jointly.

Does my child have to attend college in Montana?

No. You can use the assets in your account toward the costs of nearly any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education, which includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an “Eligible Educational Institution.” You can also visit ope.ed.gov/accreditation/ for a database of accredited schools.

Certain educational institutions located outside the United States also participate in the U.S. Department of Education’s Federal Student Aid programs, which means that money from your Achieve Montana account may be used to pay for qualified expenses at those institutions. Your account can also be used for nearly any graduate school, medical school, or law school, among others, nationwide.

Who can contribute to a 529 plan account?

Any number of people can contribute to the same Achieve Montana account, but total contributions cannot exceed $396,000 for all accounts for the same beneficiary in 529 plans sponsored by the State of Montana. This includes any funds held for the same beneficiary in the Montana Family Education Savings Program Bank Plan which is closed to new investments but continues to administer existing Bank Plan accounts.

Who can be a beneficiary?

Any person of any age with a Social Security number or Tax Identification number can be named as the beneficiary of an Achieve Montana account. As the account owner, you can select a child, adult or even yourself as beneficiary. If your beneficiary decides not to attend college or another qualified post-secondary institution, you can name another beneficiary who is a qualified member of the same family as the original beneficiary without incurring any penalties. Please see the Achieve Montana Program Description for more information on who qualifies.

Do I retain control of the account?

Yes. As the account owner, you choose the portfolios in which you invest, as well as the distribution of the funds.

How can I make contributions to my account?
  • Electronic funds transfer (minimum of $25) from your checking or savings account
  • AIP2 with scheduled contributions in set amounts of at least $25 per month from your checking or savings account
  • Payroll deduction2 (minimum of $15 per pay period) through participating employers
  • Check (made payable to Achieve Montana)
  • Rollover from another 529 plan, including the Montana Family Education Savings Program Bank Plan
  • Rollover from a Coverdell Education Savings Account or a qualified Series EE or Series I U.S. Savings Bond
  • Transfer cash from an UGMA/UTMA account (Note: consult with a tax advisor as there may be tax consequences)
  • Ugift® – Give College Savings (minimum of $15)
  • Upromise® (minimum of $25)
Can I make an investment change in my account?

Yes. You can change the direction of your future contributions at any time. Federal law permits you to move your current assets in your Achieve Montana account to a different mix of investment options up to two times per calendar year.

Are investments in Achieve Montana guaranteed?

Except to the extent of the New York Life Insurance Company guarantee that is available for the Capital Preservation Portfolio and certain of the Year of Enrollment Portfolios, investment returns are not guaranteed, and you could lose money by investing in Achieve Montana. For additional information, please refer to the Achieve Montana Program Description.

What fees are associated with Achieve Montana?

Achieve Montana has no commissions, loads, or sales charges. The total annual asset-based fee ranges from 0.395% to 0.587% (depending on which investments you choose). In addition, an Annual Account Maintenance Fee of $25 is charged to each account. This fee is waived if you are a Montana resident, use an AIP, take advantage of payroll deduction through your employer, or maintain an account balance equal to or greater than $25,000.

What is Upromise® and how can it help me save for college?

Upromise is a free to join rewards program that can turn every day purchases — from shopping online to dining out, from booking travel to buying groceries — into cash back for college. A percentage of your eligible spending will be deposited into your Upromise account. You can link your Upromise account to your eligible 529 account and have your college savings automatically transferred. Visit Upromise.com to learn more and enroll.4

What if I already have a 529 Plan? Can I transfer my account to Achieve Montana?

Yes. We will accept a rollover of funds from an account with another 529 Plan into Achieve Montana. There may be many benefits to moving your account into Achieve Montana. The state income tax deduction is also available to Montana taxpayers who make rollover contributions from another 529 Plan into Achieve Montana.

Please contact a Client Service Representative at 1-877-486-9271 for details. You should also contact the sponsor of your current 529 Plan for additional details on rolling over your account. Please be aware that not all states permit direct rollovers from 529 Plans. In addition, there may be state income tax consequences (and in some cases state-imposed penalties) resulting from a rollover out of another state’s 529 Plan.

When can I enroll a newborn?

A newborn may be enrolled at any time. Keep in mind that you are required to submit the beneficiary’s Social Security Number on the Enrollment Form. You may also open an account naming yourself as the beneficiary in anticipation of the birth or adoption of a child.

1 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements. See the Program Description for more details on qualified expenses.
2 A plan of regular investment cannot assure a profit or protect against a loss in a declining market.
3 Section 529 defines a member of the family of the beneficiary as an individual who is related to the beneficiary as follows: a son, daughter, stepchild, or a descendant of any such person; a brother, sister, stepbrother, or stepsister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the father or mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; the spouse of the beneficiary or the spouse of any individual described above; or a first cousin of the beneficiary. Gift or generation-skipping transfer taxes may apply. Please consult with your tax advisor for further information.
4 Upromise is an optional service offered by Upromise, Inc., is separate from Achieve Montana, and is not affiliated with the State of Montana. Terms and conditions apply to the Upromise service. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. Transfers from Upromise to an Achieve Montana account are subject to a $25 minimum.

Taxes

What tax benefits can I get from Achieve Montana?

Earnings grow tax deferred and are free from federal taxes when used for qualified higher education expenses.1 Qualified higher education expenses include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs during an academic period the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student. Qualified higher education expenses also include tuition expenses in connection with enrollment and attendance at an elementary or secondary public, private or religious school, certain registered apprenticeship program expenses and repayments of qualified student loans. Although these distributions are federally tax free, they will be subject to Montana income tax and the recapture of any previously taken deductions for contributions to an Achieve Montana account.3

Are there any special tax benefits for Montana taxpayers?

Yes. Contributions you make to an Achieve Montana account may be eligible as a yearly deduction to adjusted gross income of up to $3,000 per taxpayer per year ($6,000 for those married, filing jointly), in computing Montana state income tax3.

What are the Achieve Montana’s gift- and estate-tax benefits?

Individuals can invest up to $15,000 ($30,000 for married couples making a proper election) per beneficiary without incurring any federal gift-tax consequences provided you don’t make additional gifts to that beneficiary in the same year. In addition, “accelerated gifting” lets you contribute up to $75,000 per beneficiary in a single year ($150,000 for married couples making a proper election) and take advantage of five years’ worth of tax-free gifts at one time provided you don’t make additional gifts to that beneficiary for five years (Contributions are considered completed gifts to the beneficiary and are removed from your estate2, but you, as the account owner, retain control.) For more information, consult your tax advisor or estate-planning attorney.

1 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements. See the Program Description for more details on qualified expenses.
2 In the event the donor does not survive the five-year period, a pro-rated amount will revert to the donor’s taxable estate.
3 Contributions to an Achieve Montana account owned by the taxpayer, the taxpayer’s spouse or the taxpayer’s child or stepchild (if the child or stepchild is a Montana resident at the time of the contribution) are deductible in computing Montana adjusted gross income for the tax year in which they are made. Contributions may be subject to recapture in certain circumstances, such as a non-qualified withdrawal or a withdrawal or distribution from an account that was opened within three years prior to the date of the withdrawal or distribution (Recaptured Withdrawal). If the account owner is no longer a Montana resident at the time of a Recaptured Withdrawal, the Program Manager or its service provider may withhold the potential recapture tax from a Recaptured Withdrawal. Achieve Montana account owners who are Montana residents are entitled up to a yearly $3,000 deduction to adjusted gross income per taxpayer, in computing their Montana State income tax, or $6,000 for those married, filing jointly, based on contributions to Achieve Montana. Contributions may be subject to recapture in certain circumstances, such as a federal non-qualified withdrawal, rollovers to another state’s 529 plan, or withdrawals used to pay elementary or secondary school tuition, registered apprenticeship program expenses, qualified education loan repayments, or a withdrawal from an account that was opened within three years prior to the date of the withdrawal, as described in the Program Description. (Recaptured Withdrawal). If the account owner is no longer a Montana resident at the time of a Recaptured Withdrawal, we may withhold the potential recapture tax from the Recaptured Withdrawal.

Using the Assets in Your Achieve Montana Account

How can I use the money in my account?

The money in your Achieve Montana account can be used for any purpose. However, to qualify for federal and Montana state tax-free withdrawals on earnings and avoid penalties, the money must be used for qualified higher education expenses for the beneficiary at an eligible educational institution.1, 2

What counts as a qualified higher education expense?

Eligible expenses can include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs during any academic period the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student.1

Eligible expenses also include tuition expenses in connection with enrollment and attendance at an elementary or secondary public, private or religious school (K-12 Tuition), certain expenses for apprenticeship programs registered and certified with the Secretary of Labor under the National Apprenticeship Act (Apprenticeship Program Expenses) and to pay principal and interest on certain qualified education loans (Education Loan Repayments) for a beneficiary or any of the beneficiary’s siblings. The loan repayment provisions apply to repayments up to a lifetime maximum of $10,000 per individual. Although these distributions are federally tax free, they are subject to Montana income tax and the recapture of the Montana state income tax deduction. Please see the Program Description for additional information.

Is paying off a student loan a qualified higher education expense?

Effective January 1, 2019, amounts paid as principal or interest on qualified education loans of a beneficiary or a sibling of a beneficiary (up to a lifetime $10,000 limit per individual) is considered a qualified higher education expense for federal tax purposes. A qualified education loan a certain loans taken solely to pay certain qualified higher education expenses. For this specific purpose, a sibling is defined as a brother, sister, stepbrother or stepsister, including half-brothers and half-sisters, legally adopted children or children placed for legal adoption.

Although a distribution to repay a qualified education loan is federally tax free, it is subject to Montana income tax and the recapture of the Montana state income tax deduction. In addition, you cannot claim a federal income tax deduction for interest paid on a qualified education loan if you treat it as an Education Loan Repayment. Please see the Program Description for additional information.

Does my beneficiary have to attend college in Montana?

No. You can use the assets in your account toward the costs of nearly any public or private, 2-year or 4-year college nationwide, as long as the student is enrolled in a U.S.-accredited college, university, graduate school, or technical school that is eligible to participate in U.S. Department of Education student financial aid programs.2 In fact, many U.S. colleges and universities now have campuses or locations outside of the country, where money from your account can be used.

What if my beneficiary does not go to college immediately after high school?

Achieve Montana does not require a child to attend college immediately after graduating high school. There are no restrictions on when you can use your account to pay for college expenses.

What if my beneficiary decides not to go to college?

If a beneficiary decides not to attend college, you have the following options.

  • Stay invested. You can leave the money in the account in case the beneficiary decides to attend school later. There is no age restriction for using the money.
  • Change the beneficiary. You can change the beneficiary on your account at any time provided that the new beneficiary is an eligible “member of the family” of the former beneficiary.3
  • Withdraw the money for other uses. The earnings portion of a withdrawal not used for a beneficiary’s qualified higher education expenses is subject to federal and Montana state income taxes, to a 10% federal penalty tax and a Montana recapture tax.4 For limited exceptions to this penalty, please see the Program Description.

Additionally, any accumulated earnings that are withdrawn from your account must also be reported on the recipient’s income tax return for the year in which they are withdrawn. Contact your tax advisor to determine how to report a non-qualified withdrawal.

What if the beneficiary or I move out of Montana after I open an account?

You can continue to contribute to your account, and your beneficiary can still use funds in the account to attend any eligible educational institution. However, if you move out of state and no longer pay Montana income tax, you will no longer be eligible to receive the state income tax benefits.

What if I experience a financial hardship and need to withdraw the funds for a purpose other than college expenses?

You may request a distribution at any time. If the funds are not used for qualified expenses, the taxable party will be subject to federal and applicable state income taxes, plus the distribution tax on any earnings portion of the distribution. You, as the account owner, will be subject to recapture of any state income tax deduction previously taken on contributions to your account.

What happens if my child receives a scholarship or grant?

There are several options from which you can choose:

  • Use assets in your account to pay any tuition and required fees not covered by the scholarship or grant;
  • Apply assets in your account toward other qualified expenses such as certain room and board expenses and books;
  • Change the beneficiary to a member of the family3 of the beneficiary;
  • Keep any unused funds in your account to pay for future qualified expenses, including graduate school; or
  • Withdraw any unused funds up to the amount of the scholarship or grant without being subject to a 10% additional federal tax penalty. Income taxes on earnings, however, will apply. The distribution may also be subject to the Montana recapture tax.
1 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
2 An eligible educational institution is a post-secondary institution that is eligible to participate in a student aid program administered by the U.S. Department of Education.
3 Section 529 defines a member of the family of the beneficiary as an individual who is related to the beneficiary as follows: a son, daughter, stepchild, or a descendant of any such person; a brother, sister, stepbrother, or stepsister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the father or mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; the spouse of the beneficiary or the spouse of any individual described above; or a first cousin of the beneficiary. Gift or generation-skipping transfer taxes may apply. Please consult with your tax advisor for further information.
4 Contributions to an Achieve Montana account owned by the taxpayer, the taxpayer’s spouse or the taxpayer’s child or stepchild (if the child or stepchild is a Montana resident at the time of the contribution) are deductible in computing Montana adjusted gross income for the tax year in which they are made. Contributions may be subject to recapture in certain circumstances, such as a non-qualified withdrawal or a withdrawal or distribution from an account that was opened within three years prior to the date of the withdrawal or distribution (Recaptured Withdrawal). If the account owner is no longer a Montana resident at the time of a Recaptured Withdrawal, the Program Manager or its service provider may withhold the potential recapture tax from a Recaptured Withdrawal. Achieve Montana account owners who are Montana residents are entitled up to a yearly $3,000 deduction to adjusted gross income per taxpayer, in computing their Montana State income tax, or $6,000 for those married, filing jointly, based on contributions to Achieve Montana. Contributions may be subject to recapture in certain circumstances, such as a federal non-qualified withdrawal, rollovers to another state’s 529 plan, or withdrawals used to pay elementary or secondary school tuition, registered apprenticeship program expenses, qualified education loan repayments, or a withdrawal from an account that was opened within three years prior to the date of the withdrawal, as described in the Program Description. (Recaptured Withdrawal). If the account owner is no longer a Montana resident at the time of a Recaptured Withdrawal, we may withhold the potential recapture tax from the Recaptured Withdrawal.