Compare College Savings Plans > 529 College Savings Plans

Get the tax benefits and flexibility you need to save for college

Whether you're investing for a child, grandchild or even yourself, a 529 college savings plan offers tax advantages, diverse investment options and high contribution limits to help you save for future higher education expenses.
May be a good move for...
  • Tax-free growth potential
  • Federal (and often state) tax-free withdrawals for qualified higher education expenses2,3
  • Maintaining control over the account
  • Making contributions without age or income restrictions
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Simplify investing for college with a NextGen Direct Plan

Merrill Edge® offers the NextGen Direct Plan to help you set aside money for higher education expenses. Our self-directed 529 plan lets you choose from a wide range of investments while offering tax benefits and the ability to manage the account the way you want. Plus, you can make or schedule real-time transfers from your eligible Bank of America bank account to your NextGen Direct Plan.
5 cap rating from savingforcollege.com
NextGen College Investing Plan
Received 5 out of 5 cap rating11 from savingforcollege.com

Get one-on-one advice and guidance with a NextGen Select Plan

Let a professional advisor help you find the right investment options to meet your college savings needs. Contact a licensed Merrill Edge Financial Solutions Advisor™ at 1.888.637.3343 or schedule a consultation.
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529 College Savings Plans

529 college savings plans are flexible, tax-advantaged accounts that allow you to make high contributions to help you pay for college expenses. You won't be taxed on your funds as they grow—and you pay no federal (and often state) taxes on withdrawals used for qualified higher education expenses.

529 Plan benefits:

Tax-deferred growth:

Earnings grow federal (and often state) tax-free, allowing your account to potentially accumulate faster than in taxable savings accounts2

Tax-free withdrawals:

Money that's used for qualified higher education expenses is federal (and often state) tax-free2,3

No federal gift tax:

You can make annual contributions of up to $14,000 ($28,000 for couples) without paying a federal gift tax. You can also take advantage of a five-year gifting provision that allows you to make five years' worth of gifts all at once, as long as no additional gifts are made to the beneficiary in the five-year period4

Estate tax deduction:

Contributions are considered completed gifts and are removed from your taxable estate for estate tax purposes

High contribution limits:

Most 529 plans offer maximum lifetime contribution limits of $250,000 or more. NextGen offers a higher maximum lifetime contribution limit of $400,000

Minimal impact on financial aid:

Assets in a 529 plan are treated more favorably for financial aid purposes than assets in a taxable account, such as a UGMA/UTMA account5

Broad range of qualified expenses:

Money can be used to cover tuition, room and board, books and other supplies at any accredited U.S. college or university and some foreign schools2
Calculate 529 plan state tax deductions
Does your state 529 plan offer tax benefits?
Use our 529 State Tax Calculator to see if your home state 529 plan offers state tax deductions.

Frequently Asked Questions

Account ownership & beneficiaries
Who can open and contribute to a 529 college savings plan?

Parents, grandparents, relatives or family and friends can all be account owners or contribute to an existing account.

Who controls the plan's assets?

The account owner maintains control of the assets for the life of the account.

Who can be a beneficiary?

Anyone including children, grandchildren, nieces, nephews, spouses and friends can be named as beneficiaries. You can even set up more than one account for a beneficiary as long as you don't exceed the maximum contribution limit. As the account owner, you can change the beneficiary with no tax consequences at any time.6

What if my child doesn't attend college?

You can leave your assets in the account for future use, switch the beneficiary to another family member or withdraw the money and pay income taxes, plus an additional 10% federal tax on any earnings withdrawn.2,9

Contributions, withdrawals & tax advantages
What are the tax advantages of a 529 college savings plan?

When you use your 529 savings to pay for college expense, you won't pay federal—and often state—taxes on withdrawals, including any earnings.

How much can I contribute to a 529 college savings plan?

Contribution limits vary by plan. NextGen Direct and Select Plans have a high contribution limit of $400,000.

What are the age and income restrictions of a 529 college savings plan?

There are no age or income restrictions for contributions or withdrawals.

What types of contributions can be made to a 529 college savings plan?

You can only fund a 529 college savings plan with cash contributions.

Compare college savings accounts
Not sure which one is right for you?
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NextGen Direct Plan
1
It only takes a few minutes online. Here's what you'll need.
If you need help, give us call at 1.888.637.3343—24 hours a day, 7 days a week.
2
Fund your account
Fund your account instantly in real time from your eligible linked Bank of America bank account. Or, transfer funds to your account from an outside bank though the Automated Funding Service, through payroll deduction, or by mailing in a check.
Get friends and family involved: Maximize your 529 college savings plan by encouraging family and friends to contribute to an existing NextGen account, either on a regular basis or for birthday, holiday or graduation gifts.
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Start investing
  • Create an investment strategy based on your specific college planning needs
  • Choose from a wide range of investments that may be right for you, including iShare ETF portfolios
  • Access educational articles and resources to help you plan for college
  • Put your savings on autopilot by making convenient deposits with automated bank transfers or payroll deductions into a NextGen account
NextGen Select Plan
Invest with advice & guidance: Contact a licensed Merrill Edge Financial Solutions Advisor™ to find the portfolio that helps you meet your college savings goals.
Call 1.888.637.3343 today or find a local Financial Solutions Advisor at thousands of select Bank of America financial centers.

Pricing & Fees

NextGen Direct Plan
Annual account maintenance fee
$0
Minimum initial funding requirement
May not be required for certain grant-eligible Maine residents. See Program Description.
$25
Closeout fee
$0
Additional fees may apply. See Program Description for more details.
 
NextGen Select Plan
Contact a Merrill Edge Financial Solutions Advisor at 1.888.637.3343 for pricing and fees related to a NextGen Select Plan.
Looking for investment advice and guidance?
Pursue your financial goals with advice and guidance from a licensed Merrill Edge Financial Solutions Advisor™—and ask about getting your own Merrill Edge Roadmap® to help you make a plan and stay on track.10
Ready to get started?
1.888.637.3343
Call 24 hours a day, 7 days a week
Get
Fifty dollar cash bonus for a new 529 college savings plan
Get $50 when you open a NextGen 529 plan and invest $5,000
Find out whether your state 529 plan offers tax benefits
Please remember there's always the potential of losing money when you invest in securities.

Before you invest in a Section 529 plan, request the plan's official statement from your Financial Solutions Advisor and read it carefully. The official statement contains more complete information, including investment objectives, charges, expenses and risks of investing in the 529 plan, which you should consider carefully before investing. You should also consider whether your home state or your beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's 529 plan. Section 529 plans are not guaranteed by any state or federal agency.

Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state or local tax penalties. Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

1 Qualifications: To qualify for this offer, you must open a NextGen College Investing Plan Account and fund the account with at least $5,000 in cash within 45 calendar days of account opening. The balance must be held in the account for a minimum of 90 consecutive days following the funding date.

How to Enroll: Customers must enroll by clicking the Enroll and open link above, or ask to be enrolled when speaking with a Merrill Edge Financial Solutions Advisor™ at 1.888.637.3343 or at select Bank of America banking centers.

Cash Reward: The $50 bonus is a one-time credit that will be applied to the newly opened NextGen College Investing Plan Account after the relevant qualification criteria are met. The $50 bonus will be paid during the calendar month after which the 90-day funding criteria are met; only one bonus per account. The $50 bonus will be applied to your account and invested in the various securities offered by the Plan based on your new-investment allocation in effect on the date that the bonus is provided. Merrill Edge reserves the right to change or cancel this offer at any time. Merrill Edge does not provide legal or tax advice. Please consult a legal or tax advisor regarding your individual circumstances.

Limitations: Offer is limited to one $50 bonus per beneficiary.

Tax Disclaimer: The value of this reward you receive may constitute taxable income, and Merrill Lynch may issue an Internal Revenue Service Form 1099 (or other appropriate form) to you that reflects the value of such reward. In addition, the amount of the reward may be treated for tax purposes as a contribution by you to your NextGen College Investing Plan account, which may have tax consequences to you. Please consult your tax advisor, as neither Bank of America, Merrill Lynch, nor its associates provide tax advice.

2 To be eligible for favorable tax treatment afforded to any earnings portion of withdrawals from Section 529 accounts, such withdrawals must be used for "qualified higher education expenses," as defined in the Internal Revenue Code. Any earnings withdrawn that are not used for such expenses are subject to federal income tax and may be subject to a 10% additional federal tax, as well as applicable state and local income taxes.

3 Section 529 plans are established by various states and are offered to residents of all states. Depending on the laws of the customer's home state, favorable tax treatment for investing in a Section 529 plan may be limited to investments made in a Section 529 plan offered by the customer's home state. Neither Merrill Lynch, Pierce, Fenner & Smith Incorporated nor any of its subsidiaries are tax or legal advisors. We suggest you consult your personal tax or legal advisor before making tax or legal-related investment decisions.

4 For 2015, individuals can gift up to $70,000 ($140,000 for married couples filing jointly) per beneficiary in a single year without incurring gift tax. Contributions between $14,000 and $70,000 ($28,000 and $140,000 for married couples filing jointly) made in one year can be prorated over a five-year period without subjecting you to gift tax or reducing your federal unified estate and gift tax credit. If you contribute less than the $70,000 ($140,000 for married couples filing jointly) maximum, additional contributions can be made without you being subject to federal gift tax, up to a prorated level of $14,000 ($28,000 for married couples filing jointly) per year. Gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a given beneficiary in the year of contribution. For contributions between $14,000 and $70,000 ($28,000 and $140,000 for married couples filing jointly) made in one year, if the account owner dies before the end of the five-year period, a prorated portion of the contribution may be included in his or her estate for estate tax purposes.

5 Financial aid rules may change, and the rules in effect at the time the beneficiary applies may be different. For more complete information, visit the Department of Education Web site at www.ed.gov.

6 The account owner can change the beneficiary to another member of the family of the original beneficiary, without penalty. Please refer to the Internal Revenue Code definition of "member of the family." If assets are contributed from an UGMA/UTMA account, the custodian may not change the designated minor, except as permitted by applicable law.

7 Institutions must be eligible to participate in federal financial aid programs. Some foreign institutions are also eligible.

8 The beneficiary must be attending an accredited institution at least half time for room and board to be considered an eligible expense.

9 The 10% additional tax does not apply to withdrawals as a result of the designated beneficiary receiving a scholarship or the designated beneficiary's attendance at a U.S. military academy provided the withdrawals do not exceed the amount of the scholarship or value of attendance at the academy. The 10% additional tax also does not apply as a result of withdrawals made due to the death or disability of the designated beneficiary.

10 Edge Roadmap participation requires a Merrill Edge Advisory Center™ account.

11The 5 out of 5 cap ratings are as of 12/31/14 and are specifically for the NextGen College Investing Plan Client Direct Series for Maine resident and nonresident and for the NextGen College Investing Plan Client Select Series for Maine residents. Savingforcollege.com's 5-Cap Ratings provide an evaluation and comparison of one hundred four 529 plans, utilizing a mix of qualitative and quantitative metrics to examine dozens of factors grouped into the following categories: multiyear performance, costs, features, reliability and resident upgrade. Learn more at http://www.savingforcollege.com/5_cap_ratings/index.php?page=ratings_criteria.

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