How to open a 529 Education Savings Plan

How to open a 529 Education Savings Plan

Schwab 529 Education Savings Plan is one of many account types that can help your clients meet their college-savings goals for their children, grandchildren, or other loved ones. When advising on the right type of college-savings account for your clients, keep in mind the goals and advantages of each, as well as the tax considerations.

Residents of any state, regardless of age or income, may establish a Schwab 529 plan account, and anyone may contribute to the account. Investors should, however, consider whether their own state's plan, or that of their beneficiary's state, offers additional tax benefits that may not be available to them through the Schwab 529 Plan.

You can open a 529 Education Savings Plan using paper forms.

 

All accounts
  • A completed Schwab 529 Education Savings Plan Account Application
    (see application instructions for more information).
    • Your firm name, master account number, advisor name, address, and telephone number
    • The account owner's or the  responsible individual's Tooltip  name, home address,  identification number Tooltip , birth date, telephone numbers, citizenship status, employment status, employer, occupation, business address, and business phone number
    • The beneficiary's name, home address, identification number, birth date, telephone numbers, citizenship status, and relationship to account owner
  • Adobe® Reader® or Adobe Acrobat® 7.0 or higher (download the latest version on the Adobe website)
  • An initial investment, which can be a check, transfer, rollover, or enrollment in an automatic monthly investment plan. There is not a minimum initial contribution requirement.
  • The overall investment objective and investment option, as agreed upon with the account owner
In addition to the information above, the following may be required:
Account owner is a trust
  • The trust name Tooltip , trust type, date of trust, the taxpayer identification number or Social Security number), and the state under which the trust is governed
  • Trustee's name, address, Social Security number, birth date, telephone number, and employer information
  • Copies of the first page and all current signature pages of the trust document
Additional features

If establishing an ACH (Schwab MoneyLink®) profile to a client's existing Schwab One® or Schwab brokerage account

  • A completed 529 ACH (MoneyLink) form with the account number and name(s) on the account

This process may be used to open a 529 Education Savings Plan using paper forms.

  1. Go to the forms library on Schwab Advisor Center® and select Schwab 529 Education Savings Plan Account Application. Click Select, and then select Open PDF.
  2. Complete all necessary fields, and ensure all additional features the client requested have been added. To request online access to the account for your firm, complete the Financial Professional authorization section.
  3. In addition to the forms, you are required to provide your clients a copy of the Schwab 529 Plan Guide & Participation Agreement document.
  4. Print the form(s) and document, and obtain signatures from all account owners or the  responsible individual Tooltip . Mail the signed form(s) to the applicable address located on the first page of the Schwab 529 Education Savings Plan Account Application.

Once you have submitted your request:

  • The request will be reviewed and processed by the Schwab 529 plan service team.
  • If you completed the Financial Professional authorization section of the Schwab 529 Education Savings Plan Account Application form, you can access the account information on the Ascensus 529 QuickView website. You must have the Access Third Party Sites-529 QuickView Site Tooltip  security function to access this website directly from Schwab Advisor Center.
  • Once the account has been opened and funded at Schwab, your client can immediately withdraw funds ( qualified education expenses Tooltip  are not subject to taxes and penalties).
  • If you have questions or changes for your client's existing account, contact Schwab's 529 plan service team at 888-903-3863.

529 Forms can be found on Schwab Advisor Center in the forms library, and then apply a Category filter of 529 Forms. Fax completed 529 forms to the 529 Office at 617-559-8913.

If my client has a joint 529 Education Savings Plan, can both account owners access the account online?
No. When a 529 Education Savings Plan is set up as a joint account, the first SSN listed on the account application is considered the primary account owner's. Only the primary account owner will be able to access the 529 Education Savings Plan on Schwab.com, as the account is validated by the SSN.

My client has changed the address on a Schwab account, but their 529 Education Savings Plan has not been updated. Why?
The 529 Education Savings Plan is a third-party account on Schwab.com, so updates made to other Schwab accounts are not automatically reflected. Clients can log in on Schwab.com to their 529 accounts to change an address or make other profile changes. They can also make these changes by submitting the appropriate form or by calling Schwab Signature Services Alliance at 800-515-2157.

Can ACH (Schwab MoneyLink) be used to fund a Schwab 529 Education Savings Plan?
Yes. Clients may elect to move funds from their Schwab brokerage account or their Schwab One account to their Schwab 529 plan by using the 529 ACH (MoneyLink) form. ACH (MoneyLink) cannot, however, be used to withdraw funds from a Schwab 529 plan.

Do 529 Education Savings Plans have any impact on a beneficiary's financial aid eligibility?
Yes. 529 Education Savings Plans are likely to have a minimal impact on financial aid eligibility, depending on the investor's financial situation. A parent-owned 529 Education Savings Plan is considered a parental asset for purposes of calculating financial aid eligibility. However, only 5.6% of parental assets and income are reflected in the calculation. There is no impact if the account is owned by another relative, such as a grandparent, aunt, or uncle, until after such time qualified withdrawals are taken. Qualified withdrawals are considered income for the beneficiary.

If my clients want to talk to Schwab directly about their 529 accounts, whom do they call?
Your clients can call Schwab Signature Services Alliance at 800-515-2157 or the Schwab 529 plan service team at 888-903-3863 to inquire about their accounts.

If the beneficiary has more than one 529 Education Savings Plan, does the $455,000 lifetime contribution limit apply to each account?
No. The total lifetime contribution limit applies to a single beneficiary across all accounts and contributors.

How to add features to an account
How to establish a Schwab MoneyLink® profile
How to open an education savings account
How to open a personal brokerage account
Introduction to 529 Education Savings Plans
Introduction to householding

Before investing, carefully consider the plan's investment objectives, risks, charges and expenses. This information and more about the plans can be found in the Schwab 529 Education Savings Plan Guide and Participation Agreement available from Charles Schwab & Co., Inc., and should be read carefully before investing.

You may request a Schwab 529 Education Savings Plan Guide and Participation Agreement by calling 800-435-4000 or going to schwab.com/529. If you are not a Kansas taxpayer, consider before investing whether your or the beneficiary's home state offers a 529 plan that provides its taxpayers with state tax and other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available in such state's qualified tuition program. Tax and financial aid treatment of 529 plans is subject to change. As with any investment, it is possible to lose money by investing in this plan.

The Schwab 529 Education Savings Plan is available through Charles Schwab & Co., Inc., and is managed by American Century Investment Management, Inc. The Plan was created by the Kansas State Legislature under the provisions of Section 529 of the Internal Revenue code and is administered by Kansas State Treasurer Jake LaTurner. Managed by American Century Investment Management. Inc. Notice: Accounts established under the Schwab 529 Plan and their earnings are neither insured nor guaranteed by the State of Kansas, the Kansas State Treasurer, American Century Investments or Charles Schwab & Co., Inc. Accounts established under the Schwab 529 Plan are domiciled at American Century Investments and not at Schwab.

Investors should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other benefits only available in such state's qualified tuition program.

Funds deposited at Charles Schwab Bank are insured, in aggregate, up to $250,000 based on account ownership type, by the Federal Deposit Insurance Corporation (FDIC). Funds on deposit at Schwab Bank are not deposits or obligations of Charles Schwab & Co., Inc. and are not covered by the Securities Investor Protection Corporation (SIPC).

Adobe Reader and Adobe Acrobat are registered trademarks of Adobe Systems Incorporated in the United States and/or other countries, which is not affiliated with or employed by Charles Schwab & Co. Inc.

This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, you should consult with a qualified tax advisor, CPA, Financial Planner or Investment Manager.

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