FAQS

Select a topic to access questions and answers:

How Do I
General
Beneficiary Questions
Tax Benefit Questions
Contributions and Withdrawals
Investment Options
Rollover and Transfer Questions


HOW DO I [back to top]

Open an Account?
You can open an account in one of three ways:

Download and mail in an account application.
Order an enrollment kit.
Work with a financial advisor to help open an account.

Contribute to My Account?
You can make a contribution any time online at My Accounts or by using an Account Maintenance Form. Funds can automatically be transferred from your bank account on a regular basis using our Automatic Investment Plan (AIP). Automatic Investment Plan (AIP) does not assure a profit or protect against loss in declining markets. Before investing, investors should evaluate their long-term financial ability to participate in such a plan.

Withdraw Money from My Account?
You can request a withdrawal online at My Accounts or you can complete a Withdrawal Request Form. Payments can be made directly to the educational institution, account owner or beneficiary. For details, please check The Plan Description and Participation Agreement.

Make Changes to My Account?
In My Accounts you can:

  • Change Your Investment Options
  • Change Successor Account Owner
  • Establish, Change or Delete your Automatic Investment Plan (AIP)
  • Change Your Elected Investment Allocation
  • Change Address or Phone Numbers
  • Sign Up for eDelivery
  • Add or Change Bank Account Information
  • Purchase, Redeem, or Exchange
  • Alternatively, you can use the Account Maintenance Form to update your account

GENERAL [back to top]

What is a 529 plan?
A 529 plan is a tax advantaged plan that is used specifically to save for college expenses. There are two types of 529 plans—529 College Savings Plan and 529 Prepaid Tuition Plan.

Can anyone open a Scholar's Edge® account? What about grandparents?
Yes, any U.S. citizen or resident alien over the age of 18 with a valid Social Security number can open a Scholar's Edge 529 savings plan account through a financial advisor, regardless of income level or state of residence.

What is the difference between an "account owner" and a "beneficiary"?
An account owner is the person who opens and controls the 529 account. The beneficiary is the person whose education expenses can be paid from the account. An account owner sets up the account on behalf of a beneficiary. An account owner can also be the beneficiary of a 529 plan account.

What if I don't live in New Mexico?
As long as you reside in the United States of America, you can participate and receive benefits (other than New Mexico state tax benefits) from Scholar's Edge 529.

Some states offer favorable tax treatment to their residents only if they invest in the state's own plan. Non-residents should consider whether their state offers its residents a 529 plan with alternative tax advantages and should consult with their tax advisor about any state or local taxes.

Does the money have to be used at a college in New Mexico?
No, the money can be used at any accredited public or private post-secondary institution in the United States and abroad. This includes most two-year and four-year colleges and universities, vocational and technical schools, graduate schools, professional, medical and law schools.

Does my home state offer a similar 529 program?
Many states offer similar college savings programs. You should compare the benefits carefully before choosing a plan. Keep in mind that many plans offer additional state tax or other benefits only to residents of the state offering the plan.

Can I invest in more than one state's 529 college savings plan?
Yes, it is possible to have multiple 529 plan accounts in different states.

Will a 529 plan affect my child's ability to qualify for financial aid?
Since assets in 529 plans are treated as assets of the account owner when determining eligibility for financial aid, the impact on a child's ability to get aid is lower than if the assets were in the name of the child. However, certain exceptions apply.

How do I know which schools are eligible to use funds from a 529 plan?
Most schools assigned a federal school code by the Department of Education are eligible. We suggest you perform a Federal School Code search and confirm with the school.

What are 529 plan "qualified higher education expenses"?
Qualified higher education expenses include tuition, required fees, books, supplies, computers and necessary software and equipment required for attendance. Room and board expenses are also eligible when certain eligibility requirements are met. Also, the expenses that are necessary for attendance for a special-needs student are eligible. When withdrawals are used for non-qualified expenses, the earnings portion of the withdrawal will be subject to ordinary federal income tax, any applicable state income tax and an additional 10% federal tax penalty.

Can the money be used at a foreign college?
You can use a 529 plan account to pay for qualified educational expenses at some foreign colleges. To find out which schools, do a Federal School Code search.

What if I die while money is still in the account?
As an account owner you can name a "successor," a person that will take over the management of the account if the owner dies. However, if the account owner dies without naming a successor, the account will typically be transferred to the account owner's estate. Keep in mind the transfer of ownership after death varies from state to state.

How does Scholar's Edge® differ from a Coverdell Education Savings Account?
Coverdell Education Savings Accounts offer similar tax advantages but contributions are limited and may not be sufficient to adequately fund a college education. In addition, Coverdell accounts restrict who can contribute based on income levels.


BENEFICIARY QUESTIONS [back to top]

Who can be a beneficiary of a Scholar's Edge® account?
Any U.S. citizen or resident alien with a valid Social Security number. For instance, you can set up an account for your child, grandchild, spouse or someone who is not related to you. If you are planning to attend college or graduate school, you can open an account for yourself.

Can a beneficiary have more than one account?
Yes, there can be more than one 529 account for a beneficiary. For example, you can have an account set up for your child, a grandparent can open a different account for the same child, and other family members and friends can also open an account on behalf of your child.

How many beneficiaries can I have on an account?
You can only have one beneficiary on a 529 account. However, a beneficiary can have multiple accounts.

Can I change the beneficiary on my Scholar's Edge® account?
Yes, you can typically change the designated beneficiary to another eligible family member of the old beneficiary without tax consequences. If the new beneficiary is not a member of the family, the change is treated as a nonqualified distribution to the account owner and may trigger a taxable event.

If my child is in high school is it too late to open an account?
No, you can open a 529 college savings account if your child is in high school since there are generally no restrictions on the age of the beneficiary.

What if my beneficiary receives a scholarship?
If your beneficiary receives a scholarship for higher education expenses, you can withdraw an amount equal to the value of the scholarship from your account(s) for that beneficiary. Earnings on the amount you withdraw would be subject to income taxes at the ordinary federal income tax rates but will not be subject to the additional 10% federal tax. You could also choose to change the beneficiary of your account.

What if my beneficiary does not go to college?
As the account owner, you always have control of your withdrawals. If the beneficiary chooses not to attend college, you have three options:

  • Keep the funds in the account. Since there are no age restrictions on the investments, they will be available in future years if the beneficiary changes his or her mind about school.
  • Change the beneficiary. You can change your beneficiary at any time, provided that your new beneficiary is an eligible family member. You should consult your tax advisor to determine whether this may create a taxable gift.
  • Make a nonqualified withdrawal. Earnings will be subject to federal income taxes and any applicable state income tax including recapture, as well as an additional 10% federal tax.

What if the beneficiary becomes disabled or dies?
If the beneficiary becomes disabled or dies, the money may be refunded to the account owner. Earnings are taxed as ordinary income but the 10% penalty would not apply. Or, you can change the beneficiary to another eligible beneficiary.


TAX BENEFIT QUESTIONS [back to top]

What are the tax benefits of the Scholar's Edge® Plan?
Tax benefits of 529 plans include potential tax-free growth of earnings in a plan and federal tax-free withdrawals as long as funds are used for qualified higher education expenses. When withdrawals are used for non-qualified expenses, the earnings portion of the withdrawal will be subject to ordinary federal, any applicable state income tax and an additional 10% federal tax penalty.

Are plan contributions tax deductible?
Yes, your plan contributions are fully deductible by New Mexico individual tax payers from net income for New Mexico individual tax purposes. Contributions include the principal and earnings portion of amounts rolled over to a New Mexico approved Section 529 college savings plan account from a non-New Mexico approved Section 529 plan. However, the total deduction cannot exceed the cost of attendance at the applicable eligible higher education institutions as determined by the Board. State tax deductions are subject to recapture in certain instances; check with your tax professional and see The Plan Description and Participation Agreement for more details.

Can I claim a federal income tax deduction based on my contributions to my Scholar's Edge® account?
No, contributions to your Scholar's Edge® account are not eligible for federal income tax deduction.

Are withdrawals from a Scholar's Edge® account exempt from federal income tax?
Yes, as long as the funds are used for qualified higher education expenses. When withdrawals are used for non-qualified expenses, the earnings portion of the withdrawal will be subject to ordinary federal, any applicable state income tax and an additional 10% federal tax penalty.


CONTRIBUTIONS AND WITHDRAWALS [back to top]

Who can contribute to a Scholar's Edge® account?
Anyone can contribute to a Scholar's Edge® account as long as the account hasn't reached its maximum contribution limit.

What is the minimum initial investment? What's the maximum?
The minimum initial contribution required to open an account is $250 and may be allocated among as many portfolios as the account owner desires (minimum $25 per portfolio). The minimum initial contribution amount of $250 is waived if the account Owner agrees to enter into an Automatic Investment Plan (AIP) or payroll deduction. The maximum aggregate account balance per Designated Beneficiary (aggregated among all New Mexico accounts for the beneficiary) is $400,000 and, once such maximum is reached, no further Contributions for the benefit of the same Designated Beneficiary will be allowed, although the Account balance may continue to increase due to appreciation of its holdings.

What if I need to make a withdrawal for non-higher education purposes?
You can take money from your account at any time. However, if the money is not used to pay for qualified higher education expenses, earnings will be subject to ordinary federal income tax and any applicable state income tax including recapture, as well as an additional 10% federal tax. There may be exceptions, please see The Plan Description and Participation Agreement for additional details, or discuss with your tax advisor.


INVESTMENT OPTIONS [back to top]

How do I monitor Scholar's Edge® investment performance?
You may view recent Total Returns, Average Annual Total Returns or Prices.

What if I want to change my investment option?
Should your goals or needs change, you have the flexibility to reallocate your existing investment options to different portfolios available within the program. Under federal law you are able to direct a reallocation of assets in each beneficiary's 529 account up to twice during the calendar year, or whenever you name a new beneficiary. See The Plan Description and Participation Agreement for details.


ROLLOVER AND TRANSFER QUESTIONS [back to top]

Can I open an account in Scholar's Edge® with money from my children's (UGMA/UTMA) account?
Yes, you can transfer the funds from an UGMA/UTMA account into a 529 plan. The assets must be first converted to cash which may be a taxable event, and then invested into the 529 plan account. Also, certain restrictions apply to custodial UGMA/UTMA 529 plan accounts. Please see The Plan Description for more details. You should consult with a financial or tax advisor before moving the funds.

Can I roll over money from one 529 plan to another 529 plan?
Yes, you can roll over from one plan to another once per year. This will not incur taxes and penalties if the funds from the first account are deposited into the new account within 60 days from the distribution from the first account.

Can I transfer my child's existing Coverdell account into Scholar's Edge®?
Yes, you can transfer funds from a Coverdell account into a Scholar's Edge® 529 account.



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This material is provided for general and educational purposes only, and is not intended to provide legal, tax or investment advice, or for use to avoid penalties that may be imposed under U.S. federal tax laws. Contact your attorney or other advisor regarding your specific legal, investment or tax situation.

Scholar's Edge® is operated as a qualified tuition program offered by The Education Trust Board of New Mexico and is available to all U.S. residents. OFI Private Investments Inc., a subsidiary of OppenheimerFunds, Inc., is the program manager for Scholar's Edge and OppenheimerFunds Distributor, Inc. is the distributor of Scholar's Edge. Some states offer favorable tax treatment to their residents only if they invest in the state's own plan. Investors should consider before investing whether their or their designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program and should consult their tax advisor. These securities are neither FDIC insured nor guaranteed and may lose value.

Before investing in the Plan, investors should carefully consider the investment objectives, risks, charges and expenses associated with municipal fund securities. The Plan Description contain this and other information about the Plan, and may be obtained by asking your financial advisor, by visiting www.scholarsedge529.com or calling 1.866.529.SAVE (1.866.529.7283). Investors should read these documents carefully before investing.

Scholar's Edge® is distributed by OppenheimerFunds Distributor, Inc. Member FINRA, SIPC
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Scholar's Edge® and the Scholar's Edge® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.