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529 Basics

A 529 plan is a savings plan designed to help families save for college in a tax-advantaged way. It is named after Section 529 of the Internal Revenue Code that put these types of plans into effect in 1996.

529 plans are sponsored by individual states and managed by a mutual fund or other financial services company. The investments underlying a 529 plan typically consist of mutual funds.


What are the tax advantages?

  • Earnings on 529 investments accumulate tax-deferred, and distributions are federal income tax-free as long as they are used for eligible education expenses.1
  • Contributions may be deductible for state income tax purposes.  
  • You can contribute up to $13,000 to each beneficiary's account each year without gift tax consequences.2 Or you can contribute a lump sum of up to $65,000 ($130,000 for married couples) once per five-year period that is gift-tax exempt.3
  • Non-qualified withdrawals are taxable as ordinary income to the extent of earnings and may also be subject to a 10% federal income tax penalty. Such withdrawals may have state income tax implication.


How can 529 funds be used?

  • Eligible expenses include tuition, fees, certain room and board expenses, books, equipment and supplies required to attend an eligible educational institution.
  • Eligible educational institutions include most two- and four-year accredited post-secondary institutions in the United States — from colleges and universities to graduate schools and trade and vocational schools. Foreign institutions may also be eligible.
  • Earnings used on non-qualified expenses are taxable as ordinary income and may be subject to a 10 percent federal income-tax penalty with certain exceptions. For instance, withdrawals in the amount of scholarships granted to the beneficiary are subject to ordinary income tax but are generally penalty-free.


Who can open an account?

  • Any U.S. citizen or resident who has reached the age of majority can open a 529 account, as can corporations and non-profit organizations.
  • There are no restrictions based on income.
  • Some 529 plans have restrictions on the account owner's state of residency. CHET Advisor is available to Connecticut residents only; The Hartford SMART529 plan is available nationally.
  • The account can be in anyone’s name, including your own.


Who can contribute?

  • Anyone including friends and relatives can contribute to a 529 account – at any time. There are no restrictions on income, state of residency or the frequency of contributions.2


Who has control of the account?

  • As the account owner, you maintain complete control of your account, including how contributions are invested and when withdrawals are made.


What about making account changes and withdrawals?

  • You can change the beneficiary to an eligible family member.
  • As account owner, you can withdraw account proceeds at any time for eligible college expenses.
  • You can switch your investment options once per calendar year.  

Retirement Planning

Financial planning can be complex. We provide information and strategies to help you navigate the world of investing.

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1
Qualified expenses include tuition, fees, the cost of books, supplies and equipment required for enrollment.

2Assumes donor makes no other gifts during that period. If the donor elects to treat a gift as being made over five years, and the donor dies prior to the end of the that 5-year period, the portion of the gift allocable to the period after the donor’s death will be included in the donor’s estate.

3If the donor elects to treat a gift as being made over five years, and the donor dies before the end of the five year period, the portion of the gift allocatable the period after the donor's death will be included in the donor's estate. Estate tax treatment may differ by state. Any additional gifts given to the same Designated Beneficiary in the five year period will be subject to federal gift tax. Consult with your tax advisor for more information.

SMART529 West Virginia board logo

SMART529 is offered by the West Virginia Prepaid Tuition and College Savings Program Board of Trustees and is administered by Hartford Life Insurance Company.

Investments in SMART529 are not guaranteed or insured by the State of West Virginia, the Board of Trustees of the West Virginia College Prepaid Tuition and Savings Program, the West Virginia State Treasurer's Office, Hartford Life Insurance Company, The Hartford Financial Services Group, Inc., the investment sub-advisors for the Underlying Funds or any depository institution and are subject to investment risks, including the loss of the principal amount invested, and may not be appropriate for all investors.

If investors reside in or have taxable income in a state other than West Virginia, they should consider whether that state has a qualified tuition program that offers favorable state income tax or other benefits exclusive to their state's program that are not available under the SMART529 program.

Investors should carefully consider the investment objectives, risks and charges and expenses of SMART529 and its Underlying Funds before investing. This and other information can be found in the Offering Statement for SMART529 and the prospectuses or other disclosure documents for the Underlying Funds. Please read them carefully before investing or sending money. SMART529 college savings plans are distributed by Hartford Funds Distributors, LLC. Member SIPC

"SMART529" is a registered trademark of West Virginia Prepaid Tuition and College Savings Program Board of Trustees.

CHET Connecticut state seal logo

CHET Advisor is administered by the Treasurer of the State of Connecticut as the trustee of the Connecticut Higher Education Trust Program and Hartford Life Insurance Company serves as Plan Manager.

Investments in CHET Advisor are not guaranteed or insured by the State of Connecticut, the Connecticut Higher Education Trust Program, the Connecticut State Treasurer's Office, Hartford Life Insurance Company, The Hartford Financial Services Group, Inc., the investment sub-advisors for the Underlying Funds or any depository institution and are subject to investment risks, including the loss of the principal amount invested, and may not be appropriate for all investors.

Connecticut provides its taxpayers with tax advantages for investing in CHET Advisor. Before investing in a 529 plan, investors should consider whether the state they or their designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if they invest in that state's 529 plan.

Investors should carefully consider the investment objectives, risks, charges and expenses of CHET Advisor and its Underlying Funds before investing. This and other information can be found in the Disclosure Booklet for CHET Advisor and the prospectuses or other disclosure documents for the Underlying Funds, which can be obtained in the College Savings pages of www.hartfordfunds.com or by calling 877-407-2828. Please read them carefully before investing or sending money. CHET Advisor is distributed by Hartford Funds Distributors, LLC. Member SIPC

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, your clients should consult their own tax or legal counsel for advice.

"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries.

No state funds have been used to produce these materials nor have materials been produced at taxpayer expense.