Get the FAQs about the NC 529 Plan

For those who are considering opening an Account:

Almost anyone can open an Account; parents, grandparents, other relatives, friends, even certain organizations can save toward someone’s college education. Accounts can be established for a person of any age, including a newborn, adult learner, or yourself.

An Account holder can save in a way that works best for them. A regularly-scheduled contribution or occasional contributions are welcome. Anyone can contribute to the Account for your Beneficiary.

Yes. You can change the Beneficiary of the Account at any time to another child or to someone else related to your original Beneficiary who plans to attend college; unless the Account was established as a custodial UTMA/UGMA 529 Account.

The Beneficiary is not required to attend college in North Carolina in order for the Withdrawals to be considered Qualified.  The NC 529 Plan is valid nationwide regardless of state of residency for the Participant/owner or student and the student can attend any Eligible Institution for Qualified Withdrawals.  There are no penalties or additional charges for out-of-state or foreign Eligible Institutions.

Unless money is withdrawn for payment of Qualified Higher Education Expenses for your Beneficiary or in the case of the Beneficiary's death, permanent disability, or receipt of a scholarship, the Withdrawal is considered a "Non-Qualified Withdrawal." A Participant making a Non-Qualified Withdrawal must pay federal and state income tax on the earnings portion of the Withdrawal plus a 10% penalty.

  • Account earnings grow tax-free. There are no federal taxes and, for North Carolina taxpayers, no state taxes on earnings, either.
  • Withdrawals used for Qualified Higher Education Expenses are exempt from both North Carolina and federal income taxes.
  • Residents of states other than North Carolina should check with a tax advisor.
  • The features of a Qualified Tuition Program are complex and involve significant tax issues. The earnings portion of Withdrawals not used for Qualified Higher Education Expenses are subjected to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax benefits may be contingent on meeting other requirements.

At virtually any college throughout the US and some foreign schools. Qualified Higher Education Expenses (QHEE) include tuition, books, fees, room, board, supplies, computers, and related technology to name a few.  When the designated Beneficiary does not utilize the balance you can designate a new Beneficiary in most instances.

No. But because college costs vary widely depending upon the type of school, consider the type for which you want to save - state, private, community, out-of-state, and so on. That way you can better plan your current investment strategy to meet college expenses later. Remember, you can use the money in your Account to pay expenses at virtually any college anywhere.

Yes. Section 529 of the Internal Revenue Code requires the Program to establish safeguards to prevent contributions for any single Beneficiary from exceeding the amount needed to fund his or her Qualified Higher Education Expenses. To prevent excess contributions, the Program sets a Maximum Projected Expenses amount. Currently, this maximum amount is $450,000 per Beneficiary (which aggregates all Accounts held for the same Beneficiary by any Participant). The Maximum Projected Expenses amount is based on four years of undergraduate and three years of graduate or professional study at the most expensive institutions in North Carolina, although NC 529 savings may be used at any eligible institution, in- or out-of-state. The Maximum Projected Expenses amount is reviewed annually to consider whether an adjustment is needed. Additionally, federal gift tax laws may affect a portion of your contribution. Currently, you can contribute up to $15,000 per year on behalf of a Beneficiary without incurring federal gift tax.

The earnings on your NC 529 Account are free from federal and, for North Carolina residents, state income taxes, as long as you use your college savings for Qualified Higher Education Expenses, such as tuition, room and board, fees, and required equipment. Legislation passed by the NC General Assembly in 2013 eliminated the state tax deduction on NC 529 Plan contributions for tax year 2014 and forward.

  • Select from a variety of Investment Options that cover a range of strategies, from conservative to aggressive.
  • Choose a mix to meet your own investment objectives, time remaining until college, and tolerance for risk.
  • The Internal Revenue Service (IRS) allows you to change your current investment mix twice each calendar year or if the Beneficiary of your savings Account changes. You may change how your future contributions will be invested at any time.


A review of the Investment Options will help you understand the relative risk normally associated with each investment alternative. More complete descriptions of the investment philosophies are available in the Program Description.

Yes! Anyone can make a contribution to the Account. Such contributions make wonderful gifts for birthdays, holidays, and special occasions. Once a contribution is made, it becomes part of the Participant's Account on behalf of the Account Beneficiary.

These are college expenses such as tuition, fees, room and board, books, and the cost of a computer and associated equipment. Supplies and other equipment the institution requires a student to obtain as a condition of attendance may also be included as qualified expenses. Earnings in your Account are tax-free when used for Qualified Higher Education Expenses at an eligible institution.

Occasional contributions are welcome and there is no yearly Account maintenance fee for Accounts. Accounts with assets too small to be administered economically, however, may be subject to termination if additional contributions are not made. Contributing as much as you can on a regular basis will help you reach your savings goals.

Yes! You may be both Participant and Beneficiary of an Account.

No problem! You won't lose access to your money. Simply request a Withdrawal from the Account in an amount equal to the scholarship or tuition waiver. The earnings portion of such Withdrawals will be subject to federal and state income taxes.

The Internal Revenue Service (IRS) allows you to change your current investment mix twice each calendar year or if the Beneficiary of your savings Account changes. You may change how your future contributions will be invested at any time.

Yes. If you are the custodian of an account established under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA), you may transfer cash proceeds from that account to the NC 529 Plan. However, the Beneficiary of the new NC 529 Account must be the same as the Beneficiary of the custodial account, because under the rules of the original account, the Beneficiary cannot be changed and will become the holder of the Account at the age of majority. Your new savings Account also will be subject to the UGMA/UTMA custodial account terms and conditions and applicable state law.

There are many benefits to the NC 529 Plan. For example, Coverdell Education Savings contributions are limited to $2,000 per year until the child reaches age 18. With the NC 529 Plan, maximum allowable contributions are not limited by year but by total Account balance per Beneficiary - which means you can save as much as you want each year (subject to applicable gift tax) until total funds for the Beneficiary reach the maximum total allowable. With a Coverdell Education Savings Account, funds may be treated as the student's assets for purposes of eligibility for student financial assistance. There's no danger of that kind of transfer of "ownership" from Participant to Beneficiary with the NC 529 Plan. The Participant - the person who sets up the Account - always controls, or "owns" the funds.

A 529 Account held for the benefit of a dependent student is currently reported on the federal financial aid application (FAFSA) as a parental asset. This treatment of 529 assets is generally considered beneficial since parental assets are assessed at a much lower rate than the student's assets in determining the Expected Family Contribution, however, federal financial aid rules are subject to change. The student and parent should talk with the financial aid officer at the college the student will attend for more specifics since the amount the family is expected to contribute towards college costs can vary based on income, age of the older parent, the number of dependents, and other factors.

For those who already have an Account:

An EFT takes 3 Business Days for the Program to process and apply it to an NC 529 Plan Account. For example, an EFT entry made online Monday prior to 4:00 pm ET will take effect on Thursday and receive the closing price and trade for Thursday.

Typically, reallocations and Withdrawals are prevented due to funds availability. All funds are required to be available prior to your reallocation request.  Allow 10 Business Days to lapse before the funds can be available from checks and 5 Business Days from ACH or EFT contributions. You may reallocate on the 6th Business Day following a successful ACH or EFT and on the 11th Business Day following a successful check contribution, provided another contribution is not pending.

An NC 529 Plan Account does fall under the federal gift tax rules with a maximum of $15,000 per year/contributor ($30,000 for married, whose spouse consents to "split" gifts) being excluded from federal gift tax. If the contributions exceed these amounts you may elect to treat the contributions as having been made ratably over the five-year period beginning with the tax year in which the contribution was made up to $75,000 ($150,000 for married, whose spouse consents to "split" gifts).  Other contributors should make their contributions directly to the Account for the Beneficiary via check with the same gift tax limitations in mind.

The $1.50 per month is for mailed quarterly statements and confirmation documents, as indicated by page 16 of the Program Description. The Account fee can be eliminated if you change your Account settings to e-Notification, provide us an email address, and retrieve your statements and confirmations online.

The earnings on your NC 529 Account are free from federal and, for North Carolina residents, state income taxes, as long as you use your college savings for Qualified Higher Education Expenses, such as tuition, room and board, fees, and required equipment. Legislation passed by the NC General Assembly in 2013 eliminated the state tax deduction on NC 529 Plan contributions for tax year 2014 and forward.