You can start opening an Account: A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. by:
Downloading or ordering an Enrollment Kit and mailing in an Enrollment Application.
You must designate a Financial Advisor: Any individual or entity that is appropriately licensed and who has entered into an agreement with the Plan Distributor to distribute Savings Trust Agreements and interests in the Plan represented by Accounts to public investors. This term may include brokers and financial intermediaries such as investment advisors or banks. on your Application: The LoneStar 529 Plan® enrollment form used to collect eligibility information and establish an Account. when you enroll in the Plan: The LoneStar 529 Plan, which is a 529 Plan. A financial advisor is any individual or entity that is appropriately licensed and who has entered into an agreement with the plan distributor to distribute interests in the plan. This term may include brokers, and financial intermediaries, such as investment advisors or banks. The Board: The Texas Prepaid Higher Education Tuition Board. has authorized certain financial advisors to accept applications and distribute units in the plan. All Account Owner: The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. are eligible to purchase any class of Unit: An interest in a portfolio that is purchased with contributions to an Account. , but not all : are available through all financial advisors.
The Account Owner: The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. Financial Advisor: Any individual or entity that is appropriately licensed and who has entered into an agreement with the Plan Distributor to distribute Savings Trust Agreements and interests in the Plan represented by Accounts to public investors. This term may include brokers and financial intermediaries such as investment advisors or banks. will receive transaction confirmations and, upon request of the financial advisor, quarterly statements and tax forms.
You can open a LoneStar 529 Plan Account: A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. with as little as $25, and subsequent contributions can be as small as $15 when funding an account through an Automatic Investment Plan (AIP): Contributions to your Account in a fixed amount of money in regular intervals. Funds are automatically deducted from the Account Owner’s bank account or other financial institution, or through payroll deductions. or payroll deduction. There is a maximum contribution limit of $500,0001 per Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. aggregated across all accounts in Texas‑sponsored 529 plans that cannot be exceeded through additional contributions. Accounts that have reached the limit may continue to accrue earnings, but additional contributions are prohibited.
1 The maximum contribution limit is currently $500,000 per Designated Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. aggregated across all Account: A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. in Texas-sponsored 529 Plan: A state-sponsored, tax-advantaged college savings program established under and operated in accordance with IRC §529 to help save for qualified education expenses. and cannot exceed this limit. Accounts that have reached the limit may continue to accrue earnings, but additional contributions, including those from Rollover: A transfer of funds from one qualified 529 Plan account to another qualified 529 Plan account. If the transfer is completed within 60 days and is made to an account for the same Beneficiary or a Member of the Family, the rollover may be considered a tax-free transaction. Please see the Plan Description for specific situations. Funds in a qualified 529 plan account may also be rolled over to a qualified ABLE program account tax free before January 1, 2026, provided certain conditions are met. are prohibited. See the Plan Description and Savings Trust Agreement for details.
You can make a contribution any time online at My Account. Funds can automatically be transferred from your bank account on a regular basis using an Automatic Investment Plan (AIP): Contributions to your Account in a fixed amount of money in regular intervals. Funds are automatically deducted from the Account Owner’s bank account or other financial institution, or through payroll deductions.
You can request a withdrawal online at My Account or you can complete a Withdrawal Request Form and mail it in. Payments can be made directly to the educational institution, Account Owner: The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. or Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. For details, please check the Plan Description and Savings Trust Agreement.
You can use the account maintenance features at My Account to:
You can take money from your
Account:
A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries.
at any time. However, if the money is not used to pay for
Qualified Education Expenses:
Undergraduate and graduate tuition, fees, books, supplies, and equipment required for a beneficiary’s enrollment or attendance at an eligible educational institution. The term includes computers and peripherals, software (except for non-educational sports, games, or hobby software), and internet service if used primarily by the beneficiary while enrolled at an eligible educational institution. Expenses for special needs services incurred in connection with enrollment or attendance at an eligible educational institution are also included in the definition.
Qualified education expenses can also include:
• reasonable room and board for beneficiaries who are enrolled at least half-time at an eligible educational institution;
• fees, books, supplies, and equipment necessary to participate in a registered apprenticeship program;
• the repayment of up to $10,000 (lifetime per student) in student loans for the beneficiary or the beneficiary’s sibling; and
• K-12 tuition for a public, private, or religious school (up to $10,000 per year per beneficiary), although the tax consequences of using a 529 plan for elementary or secondary education tuition expenses will vary depending on state law and may include the recapture of tax deductions received as well as penalties. You should consult a tax or legal advisor before using the plan for K-12 tuition.
earnings will be subject to ordinary federal income tax and any applicable state income tax, as well as an additional 10% federal tax.
Named after
Section 529:
Section 529 of the Internal Revenue Code specifies the requirements for qualified tuition programs (529 Plans).
of the Internal Revenue
Code, or IRC:
The Internal Revenue Code of 1986, as amended.
state-sponsored 529 plans are tax-advantaged investment plans to save for
Qualified Education Expenses:
Undergraduate and graduate tuition, fees, books, supplies, and equipment required for a beneficiary’s enrollment or attendance at an eligible educational institution. The term includes computers and peripherals, software (except for non-educational sports, games, or hobby software), and internet service if used primarily by the beneficiary while enrolled at an eligible educational institution. Expenses for special needs services incurred in connection with enrollment or attendance at an eligible educational institution are also included in the definition.
Qualified education expenses can also include:
• reasonable room and board for beneficiaries who are enrolled at least half-time at an eligible educational institution;
• fees, books, supplies, and equipment necessary to participate in a registered apprenticeship program;
• the repayment of up to $10,000 (lifetime per student) in student loans for the beneficiary or the beneficiary’s sibling; and
• K-12 tuition for a public, private, or religious school (up to $10,000 per year per beneficiary), although the tax consequences of using a 529 plan for elementary or secondary education tuition expenses will vary depending on state law and may include the recapture of tax deductions received as well as penalties. You should consult a tax or legal advisor before using the plan for K-12 tuition.
Also referred to as qualified tuition programs, 529 plans are specifically designed to help families—regardless of income level—save for college expenses such as undergraduate and graduate school tuition and fees, books and equipment, and room and board at Texas public and private colleges and universities, out-of-state colleges and universities, and career schools, registered apprenticeship programs, student loan repayment, and K-12 tuition. Investments grow tax-deferred, and withdrawals for qualified education expenses are federal tax free.
Recent tax reform legislation changes allowing for payment of K-12 tuition were on a federal level, and the tax consequences of using 529 plans for elementary or secondary education tuition expenses will vary depending on state law and may include recapture of tax deductions received from the original state as well as penalties. The Account Owner: The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. should consult with a tax or legal advisor before using the plan for K-12 tuition.
All U.S. citizens and permanent resident aliens 18 years of age or older with valid Social Security numbers can establish and invest in the LoneStar 529 Plan. There are no income or state residency restrictions. Accounts can also be established by a corporation, partnership or trust; a state or local government, or tax-exempt organization described in Section 501(c)(3) of the Internal Revenue Code, or IRC: The Internal Revenue Code of 1986, as amended. or a custodian under a UGMA/UTMA account.
Any U.S. citizens and permanent resident aliens 18 years of age or older with valid Social Security numbers can open an account in the LoneStar 529 Plan. Your Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. the individual whose qualified education expenses you will be paying through the Plan: The LoneStar 529 Plan, which is a 529 Plan. can be anyone, including yourself. For instance, you can set up an account for your client’s child, grandchild, spouse, or someone who is not related to your client. If your client is planning to attend college or graduate school, you can open an Account: A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. for them.
A government entity or 501(c)(3) not-for-profit organization can establish an account to fund scholarship programs without designating a beneficiary at the time the account is established.
The LoneStar 529 Plan is open to all U.S. citizens or permanent resident aliens 18 years of age or older with a valid Social Security number, without any state residency restrictions.
No. The money can be used at any accredited public or private post-secondary institution in the U.S. and abroad. This includes most two- and four-year public and private colleges and universities, career schools, graduate schools, and medical and dental institutions. With certain restrictions, the money can also be used for K-12 tuition, registered apprenticeship programs, and student loan repayment. You should consult with a tax or legal advisor to determine such consequences.
Recent tax reform legislation changes allowing for payment of K-12 tuition were on a federal level, and the tax consequences of using 529 Plan: A state-sponsored, tax-advantaged college savings program established under and operated in accordance with IRC §529 to help save for qualified education expenses. for elementary or secondary education tuition expenses will vary depending on state law and may include recapture of tax deductions received from the original state as well as penalties. The Account Owner: The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. should consult with a tax or legal advisor before using the Plan: The LoneStar 529 Plan, which is a 529 Plan. for K-12 tuition.
If you are a non-resident of Texas, you should consider whether your home state, or your Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. home state, offers residents any tax or other state benefits, such as financial aid, scholarships, and/or protection from creditors, that are only available for participants in that state’s 529 Plan: A state-sponsored, tax-advantaged college savings program established under and operated in accordance with IRC §529 to help save for qualified education expenses. You may wish to contact your home state’s 529 plan(s) to learn more about those plans’ features, benefits, and limitations. Keep in mind that state‑based benefits should only be one of many appropriately weighted factors to be considered when deciding whether to open an Account: A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. You should consult your financial, tax, or other advisor to learn more about any state‑based benefits or any limitations that might apply to your specific circumstances.
An Eligible Educational Institution: Accredited post-secondary educational institution offering credit toward a bachelor’s degree, an associate’s degree, a graduate-level or professional degree, or another recognized post-secondary credential that is eligible to participate in certain federal student financial aid programs. Certain proprietary institutions, foreign institutions, and post‑secondary vocational institutions are also included, as are certain specified military academies. is any accredited college, university, or vocational school that is eligible to participate in certain federal financial aid programs under the Higher Education Act of 1965, including some foreign institutions. To determine whether the school your Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. might attend is included, please visit the Federal Student Aid website at www.studentaid.gov
Section 529:
Section 529 of the Internal Revenue Code specifies the requirements for qualified tuition programs (529 Plans).
of the Internal Revenue Code defines
Qualified Education Expenses:
Undergraduate and graduate tuition, fees, books, supplies, and equipment required for a beneficiary’s enrollment or attendance at an eligible educational institution. The term includes computers and peripherals, software (except for non-educational sports, games, or hobby software), and internet service if used primarily by the beneficiary while enrolled at an eligible educational institution. Expenses for special needs services incurred in connection with enrollment or attendance at an eligible educational institution are also included in the definition.
Qualified education expenses can also include:
• reasonable room and board for beneficiaries who are enrolled at least half-time at an eligible educational institution;
• fees, books, supplies, and equipment necessary to participate in a registered apprenticeship program;
• the repayment of up to $10,000 (lifetime per student) in student loans for the beneficiary or the beneficiary’s sibling; and
• K-12 tuition for a public, private, or religious school (up to $10,000 per year per beneficiary), although the tax consequences of using a 529 plan for elementary or secondary education tuition expenses will vary depending on state law and may include the recapture of tax deductions received as well as penalties. You should consult a tax or legal advisor before using the plan for K-12 tuition.
as tuition, fees, books, supplies, and equipment required for a
Beneficiary:
The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established.
enrollment or attendance at an
Eligible Educational Institution:
Accredited post-secondary educational institution offering credit toward a bachelor’s degree, an associate’s degree, a graduate-level or professional degree, or another recognized post-secondary credential that is eligible to participate in certain federal student financial aid programs. Certain proprietary institutions, foreign institutions, and post‑secondary vocational institutions are also included, as are certain specified military academies.
The term includes computers and peripherals, software (except for non-educational sports, games, or hobby software), and internet service, provided they are used primarily by the beneficiary while enrolled at an eligible educational institution. Expenses for special needs services incurred in connection with enrollment or attendance at an eligible educational institution are also included in the definition.
For
Beneficiary:
The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established.
who are enrolled at least half-time at an
Eligible Educational Institution:
Accredited post-secondary educational institution offering credit toward a bachelor’s degree, an associate’s degree, a graduate-level or professional degree, or another recognized post-secondary credential that is eligible to participate in certain federal student financial aid programs. Certain proprietary institutions, foreign institutions, and post‑secondary vocational institutions are also included, as are certain specified military academies.
Qualified Education Expenses:
Undergraduate and graduate tuition, fees, books, supplies, and equipment required for a beneficiary’s enrollment or attendance at an eligible educational institution. The term includes computers and peripherals, software (except for non-educational sports, games, or hobby software), and internet service if used primarily by the beneficiary while enrolled at an eligible educational institution. Expenses for special needs services incurred in connection with enrollment or attendance at an eligible educational institution are also included in the definition.
Qualified education expenses can also include:
• reasonable room and board for beneficiaries who are enrolled at least half-time at an eligible educational institution;
• fees, books, supplies, and equipment necessary to participate in a registered apprenticeship program;
• the repayment of up to $10,000 (lifetime per student) in student loans for the beneficiary or the beneficiary’s sibling; and
• K-12 tuition for a public, private, or religious school (up to $10,000 per year per beneficiary), although the tax consequences of using a 529 plan for elementary or secondary education tuition expenses will vary depending on state law and may include the recapture of tax deductions received as well as penalties. You should consult a tax or legal advisor before using the plan for K-12 tuition.
include reasonable room and board. The amount of room and board cannot exceed the greater of: (1) the allowance included in the “cost of attendance,” as defined under federal law, as determined by the eligible educational institution for the period; or (2) the actual invoice amount charged to the beneficiary for room and board, if the beneficiary resides in housing owned or operated by the eligible educational institution.
The following expenses are also treated as
Qualified Education Expenses:
Undergraduate and graduate tuition, fees, books, supplies, and equipment required for a beneficiary’s enrollment or attendance at an eligible educational institution. The term includes computers and peripherals, software (except for non-educational sports, games, or hobby software), and internet service if used primarily by the beneficiary while enrolled at an eligible educational institution. Expenses for special needs services incurred in connection with enrollment or attendance at an eligible educational institution are also included in the definition.
Qualified education expenses can also include:
• reasonable room and board for beneficiaries who are enrolled at least half-time at an eligible educational institution;
• fees, books, supplies, and equipment necessary to participate in a registered apprenticeship program;
• the repayment of up to $10,000 (lifetime per student) in student loans for the beneficiary or the beneficiary’s sibling; and
• K-12 tuition for a public, private, or religious school (up to $10,000 per year per beneficiary), although the tax consequences of using a 529 plan for elementary or secondary education tuition expenses will vary depending on state law and may include the recapture of tax deductions received as well as penalties. You should consult a tax or legal advisor before using the plan for K-12 tuition.
under Code Section 529 of the Internal Revenue Code:
Recent tax reform legislation changes allowing for payment of K-12 tuition were on a federal level, and the tax consequences of using 529 Plan: A state-sponsored, tax-advantaged college savings program established under and operated in accordance with IRC §529 to help save for qualified education expenses. for elementary or secondary education tuition expenses will vary depending on state law and may include recapture of tax deductions received from the original state as well as penalties. The Account Owner: The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. should consult with a tax or legal advisor before using the plan for K-12 tuition.
While federal law allows 529 Plan: A state-sponsored, tax-advantaged college savings program established under and operated in accordance with IRC §529 to help save for qualified education expenses. to be used for certain elementary or secondary education tuition expenses, state tax consequences vary and may include the recapture of state tax deductions as well as penalties. You should consult with a tax or legal advisor to determine such consequences.
Whether your Account: A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. will affect your Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. eligibility for federal financial aid depends on the beneficiary’s relationship to the purchaser. Information about how 529 plans are treated on the FAFSA can be found at Savingforcollege.com. Texas law provides that assets in your account may not be considered in determining eligibility for Texas-sponsored student financial aid. For school-based financial aid, the effect of being an account owner or beneficiary varies from institution to institution. You are advised to consult a financial aid professional and/or the state or educational institution offering a financial aid program to determine the impact of participating in the plan.
If your Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. receives a scholarship for education expenses, you can withdraw an amount equal to the value of the scholarship from your Account: A savings trust account established by an Account Owner pursuant to the Savings Trust Agreement for purposes of investing in one or more portfolios. Accounts are part of the Plan and are held in the name of the Plan on behalf of and for the benefit of the Account Owners and the Beneficiaries. Earnings on the amount you withdraw would be taxed at your tax rate but will not be subject to the additional 10% federal tax.
As the Account Owner: The individual or entity signing the Application and establishing an Account or any successor to such individual or entity. References in this Glossary to “you” or “your” mean the Account Owner in such capacity. you always have control of your withdrawals. If the Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. chooses not to attend college, you have three options:
See recent Performance, or Prices on our website.
Should your goals or needs change, you have the flexibility to rebalance your existing investment options twice per calendar year to different portfolios available within the Plan: The LoneStar 529 Plan, which is a 529 Plan. See the Plan Description and Savings Trust Agreement for details.
Yes, the IRS allows a tax-free Rollover: A transfer of funds from one qualified 529 Plan account to another qualified 529 Plan account. If the transfer is completed within 60 days and is made to an account for the same Beneficiary or a Member of the Family, the rollover may be considered a tax-free transaction. Please see the Plan Description for specific situations. Funds in a qualified 529 plan account may also be rolled over to a qualified ABLE program account tax free before January 1, 2026, provided certain conditions are met. from one 529 account to another 529 account of the same Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. or a Member of the Family: For purposes of changing the Designated Beneficiary, the definition of a “Member of the Family” of the Designated Beneficiary is: 1. a son or daughter, or a descendant of either 2. a stepson or stepdaughter 3. a brother, sister, stepbrother, or stepsister 4. the father or mother, or an ancestor of either 5. a stepfather or stepmother 6. a son or daughter of a brother or sister 7. a brother or sister of the father or mother 8. a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law 9. the spouse of the Beneficiary or of any of the foregoing individuals 10. a first cousin For purposes of determining who is a “Member of the Family,” a legally adopted child of an individual shall be treated as the child of such individual by blood. The terms “brother” and “sister” include half-brothers and half-sisters. of the beneficiary if these requirements are satisfied:
For further details on rollovers from a 529 plan to another 529 plan account, see the Plan Description and Savings Trust Agreement. Complete our Rollover Form.
Yes. Under the 2017 Tax Cuts and Jobs Act, you may roll over 529 Plan: A state-sponsored, tax-advantaged college savings program established under and operated in accordance with IRC §529 to help save for qualified education expenses. assets to a qualified Achieving a Better Life Experience (“ABLE”) program account for the same Beneficiary: The individual identified by the Account Owner whose qualified education expenses are expected to be paid from the Account or, for Accounts owned by a state or local government or qualifying tax-exempt organization (otherwise known as a 501(c)(3) entity) as part of its operation of a scholarship program, the recipient of a scholarship whose qualified education expenses are expected to be paid from the Account. Any individual may be the Beneficiary of an Account, including the Account Owner.A government entity or 501(c)(3) not-for-profit organization can establish an Account to fund scholarship programs without designating a Beneficiary at the time the Account is established. or a Member of the Family: For purposes of changing the Designated Beneficiary, the definition of a “Member of the Family” of the Designated Beneficiary is: 1. a son or daughter, or a descendant of either 2. a stepson or stepdaughter 3. a brother, sister, stepbrother, or stepsister 4. the father or mother, or an ancestor of either 5. a stepfather or stepmother 6. a son or daughter of a brother or sister 7. a brother or sister of the father or mother 8. a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law 9. the spouse of the Beneficiary or of any of the foregoing individuals 10. a first cousin For purposes of determining who is a “Member of the Family,” a legally adopted child of an individual shall be treated as the child of such individual by blood. The terms “brother” and “sister” include half-brothers and half-sisters. who meets the eligibility requirements of ABLE, within 60 days of the distribution from the 529 account. For these purposes, the Internal Revenue Code Sec. 529 definition of a Member of the Family applies.
All contributions made to an ABLE account for a taxable year, including any Rollover: A transfer of funds from one qualified 529 Plan account to another qualified 529 Plan account. If the transfer is completed within 60 days and is made to an account for the same Beneficiary or a Member of the Family, the rollover may be considered a tax-free transaction. Please see the Plan Description for specific situations. Funds in a qualified 529 plan account may also be rolled over to a qualified ABLE program account tax free before January 1, 2026, provided certain conditions are met. amounts, cannot exceed the annual ABLE contribution limit (currently $18,000). The Treasury Department and Internal Revenue Service (“IRS”) have stated that, in the case of a direct transfer, any rejected contribution returned to a 529 Plan: A state-sponsored, tax-advantaged college savings program established under and operated in accordance with IRC §529 to help save for qualified education expenses. account would not be treated as a new contribution to that account. For further details on rollovers from a 529 plan to an ABLE account, see the Plan Description and Savings Trust Agreement. If you are planning on rolling over your LoneStar 529 Plan Account to the Texas ABLE Plan, complete our Rollover Form.
The information presented in the Roth Individual Retirement Account (IRA) Rollover FAQs is based on a good faith interpretation of federal legislation enacted in December 2022. The U.S. Treasury Department and Internal Revenue Service (IRS) may issue interpretative guidance in the future that may affect the tax treatment of such rollovers.
PLEASE CONSULT WITH YOUR TAX ADVISOR REGARDING THE APPLICABILITY TO YOUR PERSONAL SITUATION. CLICK HERE TO READ SECTION 126 OF THE SECURE 2.0 ACT.
Starting January 1, 2024, a 529 plan account owner may roll over amounts from their 529 account to a Roth IRA subject to certain conditions:
(a) the 529 plan account must have been maintained for a beneficiary for at least 15 years prior to the date of the rollover;
(b) the rollover must be made in a trustee-to-trustee transfer from the 529 plan account to an established Roth IRA maintained for the benefit of the same beneficiary as the 529 plan account;
(c) the rollover is subject to the applicable annual IRA contribution limits;
(d) the rollover amount may not exceed the amount of compensation includible in the beneficiary’s gross income for the year or the aggregate amount contributed (including related earnings) to the 529 plan account before the 5-year period ending on the date of the rollover; and
(e) the rollover amount from all of the beneficiary’s 529 plan accounts into a Roth IRA may not exceed $35,000 in total.
Roth IRA income limitations are waived for rollovers from a 529 plan.
An account owner may request a rollover from their 529 plan account to a Roth IRA beginning January 1, 2024.
An account owner may request a rollover from their LoneStar 529 Plan account to a Roth IRA by submitting the LoneStar 529 Plan Roth IRA Rollover Request Form either by fax to: 402-431-4452 or by mail to: LoneStar 529 Plan, P.O. Box 540010, Omaha, NE 68154.
No. All Roth IRA rollover requests must be submitted via paper. See previous question.
No. A rollover from your LoneStar 529 Plan account to a Roth IRA must be trustee-to-trustee, meaning that it must be transferred directly from the LoneStar 529 Plan to the Roth IRA trustee/custodian.
A Roth IRA account for the beneficiary of the LoneStar 529 Plan account must be established before an account owner requests a rollover from the 529 account. If the Roth IRA trustee/custodian requires a Letter of Acceptance, the owner of the Roth IRA account will need to direct them to send that letter to the LoneStar 529 Plan before the Plan can roll over the funds. The request can be sent by fax to: 402-431-4452 or mailed to: LoneStar 529 Plan, P.O. Box 540010, Omaha, NE 68154.
Account owners can find information about their account at LoneStar529.com, by selecting Account Access and either entering the username and password for an existing account, or creating a new login if account access has not been previously established. Account owners can also contact Customer Service from 8am to 6pm CT Monday through Friday, except for holidays, by calling 800-445-4723, option 4.
The IRS has not provided guidance on whether a rollover from one 529 plan account to another 529 plan account resets the 15-year requirement. It is unclear if or when the IRS will provide such guidance.
The IRS has not provided guidance on whether a change of beneficiary resets the 15-year requirement. It is unclear if or when the IRS will provide such guidance.
The IRS has not provided guidance on whether a change of account owner resets the 15-year requirement. It is unclear if or when the IRS will provide such guidance.
The 12-month rule only applies to rollovers from one 529 plan account to another 529 plan account.
The IRS has not provided guidance on how internal transfers (transfer from one account to another account in the same plan) impact the ability to roll over to a Roth IRA. It is unclear if or when the IRS will provide such guidance.
To the extent that this references a beneficiary change, please see “If I changed the beneficiary on my LoneStar 529 Plan account, does that reset my 15-year clock?”.
There is no age requirement for the beneficiary, but the Secure 2.0 Act requires that the owner of the Roth IRA account be the same as the beneficiary of the 529 account. Please note that the rollover amount may not exceed the beneficiary’s compensation for the year or the aggregate amount contributed (including related earnings) to the 529 plan account before the 5-year period ending on the date of the rollover.
The IRS has not provided guidance on how it would handle this situation. If the IRS were to treat such an account re-opening as not resetting the 15-year clock, any rollovers would still have to comply with the 5-year requirement described in “Can I roll over funds from my 529 plan account to a Roth IRA?”.
Texas does not have a state income tax, but if you are a non-Texas resident and you previously claimed a credit or deduction on your state’s income tax for contributions to your LoneStar 529 Plan account, there might be a tax consequence for requesting a Roth IRA rollover from your account. Please consult with your tax advisor regarding the application of the 529-to-Roth rollover requirements to your personal situation.
If your beneficiary has reached the age of majority, they must sign the form acknowledging the rollover and that they will be responsible for any tax consequences from the transaction (they will receive IRS Form 1099-Q reporting the rollover).
An eligible rollover from a 529 plan account to a Roth IRA for the same beneficiary is free of federal taxes and penalties. However, the U.S. Treasury Department and IRS may issue interpretative guidance in the future that may affect the tax treatment of such rollovers. Please consult with your tax advisor regarding the application of the 529-to-Roth rollover requirements to your personal situation.
The rollover amount from all of the beneficiary’s 529 plan accounts into a Roth IRA may not exceed $35,000 in total.
According to recent updates from the IRS, a rollover from a 529 account made after December 31 of the previous year, that is put into the beneficiary’s Roth IRA by April 15 of the current year, can be designated as a Roth IRA contribution for the previous year. The Roth IRA account owner should indicate the applicable tax year at the time the contribution is made to the Roth IRA account. Consult a tax advisor or financial professional for additional guidance.
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