Facts About North Dakota's 529 Plan

With college tuition costs climbing in recent decades, parents across the U.S. are taking advantage of programs, such as 529 plans, to begin saving early for their child’s post-secondary education.

While 529 plans have proven effective, they also can be confusing because regulations and specific plans vary from one state to the next.

Residents in North Dakota can take advantage of early college tuition savings through a 529 plan known as College SAVE. Like similar plans in other states, College SAVE includes federal and state tax-deferred earnings opportunities and tax-free withdrawals in certain circumstances.

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Here are six facts specific to North Dakota’s 529 plan:

1. As noted on College SAVE’s official website, North Dakota residents taking part in the program are privy to a special state tax benefit. By taking part in College SAVE, residents in the state can deduct up to $10,000 if married and filing jointly and $5,000 if single.

2. Bank of North Dakota, the only remaining state-owned financial institution in the U.S., administers College SAVE to residents taking part in the program.

3. There is an annual $20 maintenance fee attached to each College SAVE plan. However, that fee can be waived if the participant or a designated beneficiary is registered as a North Dakota resident.

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4. In limited circumstances, Bank of North Dakota offers matching grants to certain 529 program participants. The financial institution’s matching grants are aimed at helping parents and guardians with limited means invest in their child’s education. The matching grants cap at $300 per year to eligible students. Specific terms are on Bank of North Dakota’s website.

5. Annual participation requirements in North Dakota vary widely, from as little as $25 per student to as much as $269,000. Any dollar amount within this range is subject to deferred taxation.

6. More recently, Bank of North Dakota has announced a program called Children FIRST. It is a grant program, administered through the financial institution. The bank will grant the first $100 into each child’s college fund in specific circumstances.

There are caveats to Children FIRST. A North Dakota newborn needs to be 12 months old or younger, and parents must match the funds once their child reaches 4 years of age.

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