Frequently Asked Questions
Opening and Contributing to an Account
Distributions from your College Savings Account
Account Fees and Expenses
What is the DC College Savings Plan?
The DC College Savings Plan (the "Plan") is a tax-advantaged 529 college savings investment plan (named after Section 529 of the Internal Revenue Code) offered by the District of Columbia (DC). The Plan is designed to help families save for the higher education expenses of a designated beneficiary and is available to DC residents as well as non-residents nationwide.
The DC College Savings Plan is sponsored by the Government of the District of Columbia and is administered by the DC Chief Financial Officer. The DC Chief Financial Officer or his designee, the DC Treasurer, will serve as the program administrator. All assets of the program, which include all of the assets invested in a participant's account, will be held in the DC College Savings Plan Trust, of which the DC Chief Financial Officer or his designee, the DC Treasurer, shall serve as the fiduciary and Trustee of the Trust.
Who is the program manager?
The program manager, Calvert Investments, Inc.. (Calvert), is an investment firm located in Bethesda, Maryland. Calvert is a subsidiary of Ameritas and provides administrative, investment management, and distribution services for the DC College Savings Plan.
Who can invest in the plan?
Any US citizen or legal resident of majority age (18 or 21, varying by state) can open an account for anyone else, but a beneficiary must be designated. The beneficiary can be that person's relative or acquaintance, or one can even open an account for oneself. There are no income or age limits or local residency requirements. An account may be owned by one person only, and there can be only one beneficiary per account. More than one person is permitted to open an account naming the same beneficiary.
Who can be a designated beneficiary?
A designated beneficiary can be any individual of any age, provided that he or she is a US citizen or resident alien and has a valid Social Security or other US taxpayer identification number. Your designated beneficiary does not need to be a family member or related to you in any way. You can open an account for anyone—including yourself!
Opening and Contributing to an Account
How can I open an account?
To open an account, enroll online or complete the Participation Agreement and submit it with your initial contribution paid via check (made out to DC College Savings Plan), automatic bank deposit, payroll deduction, or through your financial advisor. For more information, call a national plan representative at 800-368-2745 (DC residents call 800-987-4859); or speak with your financial advisor. Be sure to read the DC Program Disclosure Booklet before investing.
How much does it cost to open an account?
You can easily open an account for anyone, including yourself, with a low initial contribution of:
- $15 if you set up a payroll deduction plan with your employer,
- $25 if you set up an automatic contribution plan through a bank, or
- $100 if you send a check (made out to DC College Savings Plan).
How can I make contributions to my account?
There are several ways to fund an account, including:
- contributions made by check (made out to DC College Savings Plan);
DC residents: Mail to DC College Savings Plan, P.O. Box 11466 Washington DC 20008
Non DC residents: Mail to DC College Savings Plan, c/o BFDS P.O. Box 219544 Kansas City, MO 64121-9544
- contributions made to an established account by telephoning 800.987.4859 (for DC residents) or 800.368.2745 (for non-DC residents)
- contributions made through electronic transfers from your bank (which can be established on a semi-monthly, monthly or quarterly basis); or
- contributions made by investing systematically with a payroll deduction program established through your employer.
Is there a maximum amount that may be contributed to an account?
There is no annual limit for account contributions, but there is an overall, lifetime maximum contribution amount of $260,000 per beneficiary. After reaching this limit, additional contributions will not be accepted. Accounts that have reached the maximum amount may continue to accrue earnings, even though no further contributions will be accepted. If there are other DC College Savings Plan accounts for the same beneficiary, you will need to aggregate those accounts in order to determine whether additional contributions can be made.
Who controls the account?
The account owner controls the account and retains control of the account even after the beneficiary reaches legal age of majority. Only the account owner can change investments, take distributions, or change the account beneficiary. These requests must be made in writing to Calvert.
Can I contribute to a DC College Savings Plan account and another education savings account, such as a Coverdell Education Savings Account, in the same year?
Yes. Contributing to a DC College Savings Plan account will not affect your ability to invest in other education savings vehicles, such as a Coverdell Education Savings Account or an account under the Uniform Gift to Minors Act (UGMA/UTMA). If contributing to more than one account, you should consult a tax advisor.
Can I roll over my funds from another state's college savings plan into the DC College Savings Plan?
Yes, as often as once every 12 months. However, there is no DC tax deduction available for any funds rolled over to your DC account. When you change the beneficiary of your account, you can transfer funds between programs.
How does the DC College Savings Plan compare to the DC Tuition Assistance Grant (TAG) Program?
The DC TAG Program provides DC residents who qualify and have graduated from high school on or after January 1, 1998, with a grant to attend public colleges and universities nationwide. The grant pays the difference between in-state and out-of-state tuition, which enables DC residents to pay the low in-state rate, up to a maximum of $10,000 per year. DC residents attending private colleges and universities in the DC metropolitan area or private historically black colleges and universities nationwide can receive grants of up to $2,500 per year. Further information can be accessed at http://www.osse.dc.gov/ or by contacting the DC Office of the Superintendent of Education at 202.727.2824. Utilizing these two programs as a complementary package provides you with additional resources to help your child obtain a college education.
Can a 501 (c)(3) organization establish an account?
Yes, a nonprofit organization described in Section 501 (c)(3) of the Internal Revenue Code may establish and become the account owner of an account to fund scholarships for persons whose identity will be determined upon disbursement.
What investment options are available in the plan?
The DC College Savings Plan offers three different types of investments for your account contributions. First, you can choose a fund from the age-based portfolio options, which include five funds based on your child's current age. You simply choose the age range that matches your account beneficiary's age. Over time, the portfolio's investment mix automatically becomes more conservative as the child approaches college age. Second, the plan offers a diversified selection of funds in the single fund investment strategy. Third, you can invest in the stability of principal investment strategy. For more complete information on the investment options available in the plan, refer to the DC Program Disclosure Booklet, which can be mailed to you by calling 800-368-2745 (DC residents call 800-987-4859). Investments are not guaranteed by the DC government and may lose value.
Are there any sustainable and responsible investment options available in the plan?
Sustainable and responsible (SRI) options are available in the plan, and investors can actually choose from a full array of SRI College Savings Plan options. Other college savings plans offer, at most, two SRI options, which may limit the investor's ability to properly allocate funds. All of the funds within the age-based portfolios, as well as several of the single fund investments, are SRI investments. The DC College Savings Plan is managed by Calvert, a leader in sustainable and responsible investing for two decades. For more information, please refer to the DC Program Disclosure Booklet.
How often can I change the investments in my account?
As of January 1, 2015, you can change your investment options twice per calendar year. You can also change investments if you change the designated beneficiary on your account.
Distributions From Your College Savings Account
What qualified expenses are covered by investments in the plan?
Your account balance can be used free of federal and DC income taxes to pay for tuition, room and board, fees, textbooks, supplies, and any equipment (such as a computer) required for attendance or enrollment. Room and board costs may only be paid if the student is enrolled on at least a part-time basis. Federal law limits the amount of room and board costs that may be paid if the student lives off campus.
Who determines whether the distribution was made for a qualified expense?
The account owner or beneficiary makes the determination and must retain appropriate documentation to show that a withdrawal was made for qualified higher education expenses.
Can I use the account to pay for expenses at any US college or university?
Generally, yes. Your account savings can be used to pay for a beneficiary's qualified higher education expenses at any accredited US college, university, graduate, vocational, community college or technical school, as well as some foreign schools. Research eligible institutions on the US Department of Education's school code search page at http://www.fafsa.ed.gov/. Money taken from the account to pay for qualified expenses in one calendar year must be used in that calendar year.
How can I find out about the value of my account?
Use online account access or call Calvert at 800.368.2745. Account balances are updated each day that the New York Stock Exchange is open for business. We will also send you a quarterly account statement with a description of your account activity and your account balance.
How do I request and receive a distribution?
To request a distribution, simply fill out a distribution form indicating the amount of the distribution and the specific investment option(s) from which the distribution is to be made. Distributions are typically paid by check or Automated Clearing House, although wire transfers may be available in some cases.
Who can contribute to a beneficiary's account?
Anyone can contribute to the account. However, only the account owner (who is required to file a DC income tax return and who makes a contribution) can elect to take a deduction for DC income tax purposes. Further, only the account owner can make decisions regarding the account, including taking withdrawals from the account, changing the account's investments and changing the beneficiary.
Who can change the beneficiary on the account?
Only the account owner can change the beneficiary of an account. To avoid federal tax and a 10% federal tax penalty on earnings, the new beneficiary must be a member of the family, as defined below, of the previous beneficiary.
Who qualifies as a member of the family?
A beneficiary's family members include a spouse, any first cousins, and the following:
- a son or daughter of the beneficiary (or a descendant of either)
- a stepson or stepdaughter of the beneficiary
- a brother, sister, stepbrother or stepsister of the beneficiary
- the father or mother of the beneficiary or an ancestor of either
- a stepfather or stepmother of the beneficiary
- a brother or sister of the father or mother of the beneficiary
- a son or daughter of a brother or sister of the beneficiary
- a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law of the beneficiary
- the spouse of any person described in 1-8 above
- any first cousin of the beneficiary.
What happens if the beneficiary receives a scholarship, becomes disabled, or dies?
The account owner can withdraw the assets if the beneficiary receives a scholarship, becomes disabled or dies. A withdrawal on account of the beneficiary's death, disability, or receipt of a scholarship (to the extent of the scholarship award) is subject to federal income tax but no federal tax penalty.
What happens if the beneficiary does not use the account for higher education expenses?
The account owner may select a new beneficiary who is a member of the family of the previous beneficiary without income tax or penalty. As an alternative, the account owner may withdraw the funds, but will have to pay federal income tax and a 10% federal tax penalty on the earnings. For DC taxpayers, that portion of non-qualified withdrawals that is attributable to previously deducted contributions and the account earnings shall be subject to District of Columbia income taxation in the year in which the withdrawal is made. Consult your tax advisor.
Can two individuals be named as joint beneficiaries on a single account?
No. Only one individual can be designated as the beneficiary of an account. In addition, there can only be one account owner for an account.
Can several people open an account for the same beneficiary?
Yes, more than one person is permitted to open an account for the same beneficiary. Only one person, however, may be listed as the owner on the account.
Will savings in this account affect a beneficiary's eligibility for scholarships or financial aid?
Eligibility for merit-based, achievement, and other scholarships that are not dependent on the account beneficiary's assets should not be affected. Assets in a plan account are considered those of the account owner in determining eligibility for federal financial aid. Generally, the "expected contribution" percentage of parents' assets is much lower than the percentage of a child's assets in determining eligibility calculations.
Are the contributions tax-deductible for federal income tax purposes?
No, your contributions are not deductible for federal income tax purposes. However, earnings and qualified distributions are not subject to federal tax.
Are the contributions tax-deductible for DC income tax purposes?
Yes. Each taxpayer who is both an account owner and a DC taxpayer can deduct up to $4,000 of contributions to their accounts per year ($8,000 for married couples filing jointly where each taxpayer owns an account) on their DC tax return (Form D-40, line 13).
DC residents making contributions to accounts where they are not the account owner will not be able to take this deduction. If contributions exceed the allowed deduction in a calendar year, the excess can be carried forward in subsequent tax years (subject to the annual limit), within five years of the contribution date.
Rollovers from another qualified tuition program are not considered contributions eligible for the DC tax deduction.
Will the earnings on my contributions to the plan be subject to federal or DC income tax?
The earnings on your contributions are tax-free for as long as your money stays in the plan. When the plan makes a distribution to pay for the beneficiary's qualified higher education expenses (i.e. college costs), the distribution will also be exempt from federal and DC income tax.
(Non-DC residents should consult their tax advisor to determine whether earnings and distributions are tax-exempt in their state.)
What are the federal gift tax considerations of contributing to the DC College Savings Plan?
No federal gift tax will be imposed on an account owner if contributions to an account for a beneficiary, together with all other gifts by the account owner to the beneficiary (that year) do not exceed $14,000 or $28,000 for a married individual who elects to split gifts with his or her spouse. If an account owner's contributions to accounts for a beneficiary in a single year exceed $14,000, the account owner may treat contributions up to $70,000 as having been made ratably over a five-year period. (If the contributor dies within five years of the date the money was gifted, the portion of the contribution allocable to the remaining years in the five-year period (not including the year in which the contributor died) would be includible in computing the contributor's gross estate for federal estate tax purposes. Please consult your tax advisor).
Are there any DC income tax consequences for early withdrawals?
Any DC tax deduction taken shall be subject to recapture in the following scenarios:
- a withdrawal or rollover is taken within two years of the establishment of the account for any reasons other than the payment of qualified higher-education expenses;
- withdrawals taken due to death or disability of, or scholarship to, a designated beneficiary (except that only the amount of the scholarship is exempt from recapture);
- the funds are transferred to another account under the plan.
Can a part-year resident take a full tax deduction?
For district income tax return purposes, a part-year resident of the District of Columbia is allowed a deduction for contributions made to the plan only during the period of residency in the District of Columbia.
Account Fees and Expenses
What costs and fees will I incur in connection with my account?
Most 529 plans have an enrollment fee and an annual maintenance fee. The following direct fees will apply to:
- New enrollments - free for DC residents/$25 for non-DC residents
- Annual maintenance - $15 for DC residents/$30 for non-DC resident
Purchases made through a financial advisor may be subject to a sales charge. In addition, the underlying investment management and other expenses apply. The following charts provide the total operating expense ratios for the underlying investments based on the most recent past fiscal period for each of the underlying investments.
Age-Based Portfolio Option
Total Expense to Account Owner
DC College Savings age 0 - 5
DC College Savings age 6 - 10
DC College Savings age 11 - 13
DC College Savings age 14 - 16
DC College Savings age 17 & up
Single Fund Investment Option
Total Expense to Account Owner
Ameritas Principal Plus*
Calvert Balanced Portfolio
Calvert Equity Fund
Calvert Income Fund
Calvert International Equity Fund - DC529
Calvert Small Cap Fund - DC529
State Street Equity 500 Index Fund - DC529
Please see the Program Disclosure Booklet for a complete listing of all charges and expenses.
Will I receive a bill for the annual maintenance fee?
You will not receive a bill; your annual maintenance fee will simply be deducted from the account once a year.
If I have a specific question about the DC College Savings Plan or about my own account, whom do I contact?
If you have any questions about your account or how the plan works, you can call a Calvert representative toll-free at 800-368-2745 (DC residents call 800-987-4859). The plan Web site contains additional information and all necessary documents and forms. You may also speak with your financial advisor. If you do not have a financial advisor and would like one, use Calvert's free Web-based Advisor FinderTM Service to locate a qualified investment professional in your area.