September is College Savings Month in Nebraska. As State Treasurer, I serve as Trustee of Nebraska’s state-sponsored college savings plan. Here are answers to some of the questions I am often asked about the plan.
A friend told me a 529 college savings plan is the best way to save for college for my kids. What is a 529 college savings plan?
A 529 college savings plan is a state-sponsored, tax-advantaged investment account.
Does Nebraska have a 529 program?
Yes, the Nebraska Educational Savings Trust, which is called NEST.
A friend told me a 529 college savings plan is the best way to save for college for my kids. What is a 529 college savings plan?
A 529 college savings plan is a state-sponsored, tax-advantaged investment account.
Does Nebraska have a 529 program?
Yes, the Nebraska Educational Savings Trust, which is called NEST.
If I put money in a NEST account, do I get a state income tax deduction?
Yes. An account owner who files a Nebraska State Income Tax return, may deduct up to $10,000 per tax return ($5,000 if married filing separately). Eligible contributions must be made or postmarked by December 31 each year to qualify for the deduction.
Do I have to pay income tax on the invested income?
No. Investment earnings on an investor’s contributions accumulate on a tax-deferred basis while in an account. Qualified withdrawals are exempt from federal and Nebraska state income tax if used to pay for the beneficiary’s qualified higher education expenses.
What are “qualified higher education expenses”?
Qualified expenses include tuition, fees, books, computers and laptops, supplies and equipment required for the beneficiary to enroll in and attend an eligible educational institution. Reasonable room and board expenses are also considered qualified higher education expenses for students enrolled at least half time.
If I put money in a NEST college savings account does my child have to go to college in Nebraska in order to use that money?
No. Money in a NEST account can be used at virtually all universities, community colleges, technical schools and graduate schools nationwide and some abroad.
Do I get to choose how money in my account is invested?
Yes. The NEST Direct Plan offers 23 investment options consisting of four Age-Based Options, three Static Options and 16 Individual Options. The NEST Advisor Plan offers 27 investment options consisting of four Age-Based Options, three Static Options and 20 Individual Options. The TD Ameritrade Plan offers 24 investment options consisting of four Age-Based Options, three Static Options and 17 Individual Options. The State Farm Plan offers nine investment options consisting of one Enrollment-Based Option, which includes five Portfolios, and four Static Options.
I am afraid of the stock market right now. Does NEST let me choose an FDIC-insured savings account?
Yes.
Who has control of the money in a NEST account?
The account owner, not the beneficiary, has complete control of the account. Only the account owner can request a withdrawal from the account.
Is there a limit on the number of accounts in a family?
No. Each account may have only one beneficiary, but you can have an account for each child.
How do I open an account?
To open an account, a parent or grandparent must complete an Enrollment Form. The form can be completed online. You can go to the Nebraska State Treasurer’s website at treasurer.nebraska.gov/csp to choose a plan and click on the appropriate link. If a parent chooses the Advisor plan, his or her financial advisor will assist in signing up for the plan.
How are contributions made?
Contributions can be made to an account by contributing electronically from a bank account, checks, wire transfer, payroll deduction, rollover, Coverdell ESA, redemption from certain US Savings Bonds, transfers within the Trust, Uniform Gift to Minors Act (UGMA) accounts or Uniform Transfers to Minors Act (UTMA) accounts.
Who is in charge of managing the NEST college savings plans?
The Nebraska State Treasurer acts as Trustee for the Trust and is responsible for the overall administration of the plans. First National Bank of Omaha serves as Program Manager, and the Nebraska Investment Council is responsible for the investment of money in the Trust and the selection of all Investment Options.
When is the best time to start investing in a plan?
Now. By starting to save early, you will be able to take advantage of a longer investment time horizon. But it is never too late to start.
Where do I get more information about NEST college savings plans?
At treasurer.nebraska.gov or call the Nebraska State Treasurer’s Office at 402-471-2455 and ask to speak to a college savings specialist.
