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Facts About Connecticut's 529 Plans

By    |   Wednesday, 20 May 2015 11:35 AM

Connecticut has two major options for parents who want to save towards college tuition for their youngsters – in the form of federal and state tax-exempt 529 plans. The Connecticut plans are known as the CHET 529 college savings program and the Advisor Plan (both named from the Connecticut Higher Education Trust).

 The 529 tax-advantaged savings plans are authorized by the IRS to encourage people to save for future college costs. These plans, legally known as "qualified tuition plans," are sponsored by each of the 50 states, state agencies or educational institutions and differ from one state to the next on what they offer and entail. Here are some facts about Connecticut's CHET plans.

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  1. The Connecticut Higher Education Trust – CHET – is a savings program initiated in 1997. Its program manager is TIAA-CREF Tuition Financing Inc.

  2. You do not have to be a resident of Connecticut to open a plan. Any citizen of the United States or resident alien with a valid Social Security number or taxpayer identification number can participate.

  3. Contribution caps for each plan/beneficiary are set at $300,000 with a minimum of $25 contribution, unless payroll deduction is enacted. If that is the case, the minimum contribution is $15.

  4. This plan has three age-based options; the Moderate Managed Allocation, Conservative Managed Allocation and the Aggressive Managed Allocation options – each with six various portfolios of underlying mutual funds. Funds are placed in an appropriate portfolio matched by the beneficiary's age.

  5. CHET's static investment option comes in four parts and five individual options plus a money market option.

  6. While there are no enrollment or account maintenance fees associated with CHET, there is a .15 percent manager fee and a .01 percent fee paid to the state, according to savingforcollege.com, which also states that there are no program management fees for the Principal Plan Interest option, and that the fees are waived for the Money Market Option.

  7. There are matching funds for contributions that provide $100 to families that open a CHET prior to their baby's first birthday or within the first year following an adoption. Families who save an additional $150 in the first four years will see a state match of that money.

  8. Contributions to CHET up to $5,000 annually for individuals or $10,000 by married couples are eligible for deductions in state income tax. Rollover contributions are not deductible, however.

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The CHET Advisor Plan is managed by Hartford Life Insurance Co. and features an age-based, asset allocation and individual fund portfolio choice. There are a number of differences between the two plans.
  1. The account owner must have a Connecticut mailing address or be a resident on active duty in the U.S. armed forces.

  2. Minimum contributions are $50 with additional minimum investments of $25 per account.

  3. This plan has one age-based option with five portfolios of underlying mutual funds.

  4. There are five static options.

  5. Program management fees are .24 percent, with .02 percent going to the state, plus other fees.

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Connecticut has two major options for parents who want to save towards college tuition for their youngsters - in the form of federal and state tax-exempt 529 plans.
529 plan, Connecticut, facts
Wednesday, 20 May 2015 11:35 AM
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