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Features


Tax-free Growth

Earnings in the plan grow federal income tax free for the life of the account.

Tax-free Withdrawal

You can withdraw the money federal tax free, as long as it’s used to pay for qualified higher education expenses. When withdrawals are used for other purposes, the earnings portion of the withdrawal is subject to federal income taxes, any applicable state tax and an additional 10% federal tax.

Use Your Savings at Schools in the U.S. and Abroad

You can use your savings to pay for qualified higher education expenses at most accredited institutions in the U.S., including vocational schools, two- and four-year colleges and graduate schools, as well as at some foreign institutions.

Choose Your Beneficiary

Put money away for future higher education costs—whether for your child, grandchild, relative, friend, spouse or even yourself. Get more information on gifting.

Control and Flexibility

Because the 529 account is in your name, you retain control over when and how the savings are used. You decide when and how much to contribute, and control when to make withdrawals.

You can even change beneficiaries among qualified family members without penalty or tax ramifications.

Broad Range of Investment Options

The LoneStar 529 lets you pick your path to a big future by offering numerous investment portfolios based on risk tolerance, time horizon and financial situation. It’s easy to find one that suits your particular needs.

Use Your 529 Account for K-12 Tuition, Student Loan Repayment or Participation in a registered apprenticeship program

Under Section 529 of the Internal Revenue Code, assets in the Account can also be withdrawn on a tax-free basis for any of the following purposes:

  1. Fees, books, supplies and equipment required for the participation of a designated beneficiary in a Registered Apprenticeship Program;
  2. up to $10,000 per year of tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school as determined under applicable state law; and
  3. up to $10,000 in amounts paid as principal or interest on any Qualified Education Loan of the designated beneficiary or a sibling of the designated beneficiary.

The $10,000 limitation for public, private, or religious schools applies on a per-student basis, rather than a per-account basis. Although an individual may be the designated beneficiary of multiple accounts that individual may receive a maximum of $10,000 in distributions free of federal tax per taxable year, regardless of whether the funds are distributed from multiple accounts. Similarly, the $10,000 aggregate limitation on Qualified Education Loan Repayments applies on a per-student basis regardless of whether the funds are distributed from multiple accounts.

Before making contributions or withdrawals from the Plan for qualified expenses at K-12 Schools, Registered Apprenticeship Programs, or Qualified Education Loan Repayments, Account Owners should consider that (i) the Investment Portfolios within the Plan were designed for college savers (e.g., persons saving for undergraduate and graduate school) not saving for qualified expenses at K-12 Schools, Registered Apprenticeship Programs, or Qualified Education Loan Repayments, and therefore Account Owners should take into account their investment horizon, and (ii) the information presented is based on a good faith interpretation of the statutory language.

5823-NLD-6/18/2020