Information for Financial Advisors
Saving for college is a vital component of a family’s financial portfolio. State-sponsored 529 plans are a popular and beneficial way for families to put away funds for higher education expenses. Like all 529 plans, Washington’s GET and DreamAhead feature tax-free growth and withdrawals.
The Guaranteed Education Tuition (GET) Program is a prepaid tuition plan with a unique added benefit: the value of a GET account is guaranteed to keep pace with in-state tuition costs, no matter how much they change between the time a family opens an account and the time their child is ready for school.
We understand that every family has different savings and investment goals, so rather than replacing any of the methods your clients are already using, GET is designed to complement these efforts. By sharing your knowledge of this program with your clients, you will be expanding their range of savings options while reinforcing your reputation and commitment to helping them create the best financial portfolios that meet their families’ unique needs. Below are resources to help you learn more about the program and materials that you can share with your clients.
The DreamAhead College Investment Plan is a 529 plan created by the state of Washington to help everyone in the U.S. save for qualified education expenses at eligible schools worldwide, including registered apprenticeship programs. DreamAhead provides a wide range of investment options and tools to help clients save. Friends and family can also help through gift contributions.
Share WA529 materials with your clients
- WA529 Summary Sheet
- WA529 Brochure
- GET Program Details Booklet
- GET Enrollment Guide
- GET Enrollment Form
- DreamAhead Program Details Booklet
- DreamAhead Enrollment Form
You can also request printed materials to distribute to clients or place in your lobby.
A 529 college savings plan isn't only for parents! Family members – including grandparents, aunts and uncles – can open a GET or DreamAhead accounts to help fund a child's future higher education AND enjoy important tax benefits.
- You can make a dream come true. Create a lasting legacy!
- Retain control. Assets in a 529 account are excluded from the federal taxable estate, but the account owner maintains complete control over them. If an unforeseen need arises, you can access your account – at any time, for any reason (taxes and penalties may apply). The beneficiary never gains ownership – at any age. Custodial accounts and trusts don't have this flexibility.
- Control also means that you can change the beneficiary. The only restriction is that the new beneficiary must be a "family member" of the old beneficiary (as defined by the IRS; see IRS Publication 970 for more information). You may voluntarily give up control by transferring account ownership to someone else, including the beneficiary.
- Accelerated gifting. A special federal gift tax exclusion allows you to contribute a large sum in a single year. The IRS code allows for a five-year acceleration of the annual federal gift tax exclusion. That means that you can contribute up to $85,000 per taxpayer ($170,000 for married couples) per beneficiary in one year without incurring federal gift tax consequences. To take advantage of this opportunity, you simply elect to prorate a contribution of more than $17,000 evenly over five years on IRS Form 709. Of course, you can contribute any amount at any time, up to the maximum allowable account value subject to normal federal gift tax rules.
Enjoy tax advantages**
- Gift tax exclusion. If your contributions, together with any other gifts to the Student (over and above those made to your Account), do not exceed $17,000 per year ($34,000 for married couples making a proper election), no gift tax will be imposed for that year. Gifts of up to $85,000 can be made in a single year ($170,000 for married couples making a proper election) for a Student and you may elect to apply the contribution against the annual exclusion equally over a five-year period. This allows you to move assets into tax-deferred investments and out of your estate more quickly.
If you die with assets still remaining in your Account, the Account’s value will generally not be included in your estate for federal estate tax purposes, unless you elect the five-year averaging and die before the end of the fifth year. If your Student dies, and assets remain in your Account, the value of your Account may be included in the Student’s estate for federal tax purposes. Further rules regarding gifts and the generation-skipping transfer tax may apply in the case of withdrawals, changes of Students, and other situations. The state law treatment of gift and estate taxes varies so you should check with your tax advisor for the specific effect of federal and state (if any) gift tax and generation skipping transfer tax on your situation.
- Tax-free growth and withdrawals when funds are used for qualified higher education expenses. Contributions to a GET and DreamAhead accounts are made post-tax. However, GET and DreamAhead accounts grow free from federal income tax and withdrawals remain free from federal income tax when you use your savings to pay for qualified higher education expenses such as tuition, room and board, books, supplies, and computer equipment. Note that federal law now considers certain K-12 tuition expenses (up to $10,000) to be qualified higher education expenses. Keep in mind that while you can make withdrawals to pay for K-12 tuition, GET is not designed to accommodate such expenses.
**The availability of tax or other benefits may be contingent on meeting other requirements. Only the earnings portion of a withdrawal not used to pay for qualified expenses may be subject to federal income tax and a 10% federal penalty tax; the entire amount of the withdrawal may be subject to state and local income taxes. Remember that GET accounts require either the account owner or student beneficiary to be a Washington resident at the time of opening the account. If you are not a Washington resident, before investing, you should consider whether your or the student’s home state offers a 529 Plan that provides its taxpayers with favorable state tax and other state benefits such as financial aid, scholarship funds, and protection from creditors, that may only be available through an investment in the home state’s 529 plan, and which are not available through saving with GET. For more information on tax advantages, view the GET Program Detail Booklet, IRS Publication 970, or consult a tax professional.