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General

What is a 529 plan?

A 529 plan is a tax-advantaged investment plan typically sponsored by a state and designed to help families save for a beneficiary’s (typically one’s child or grandchild) future education. The savings in a 529 plan grow free from federal income tax. When withdrawals are used for qualified expenses, they are also tax-free.

There are two types of 529 plans: prepaid plans like GET – the Guaranteed Education Tuition program and saving plans, like the DreamAhead College Investment Plan. The money in the account can be used to pay for qualified expenses for a beneficiary.

What is the DreamAhead plan?

The DreamAhead College Investment Plan is a 529 plan created by the state of Washington to help everyone in the U.S. save for higher qualified expenses. Accounts can be easily managed online and used to pay for tuition at an elementary or secondary public, private or religious school, and qualified higher education expenses at eligible schools all over the U.S. and overseas. DreamAhead provides a wide range of investment options and tools to help you save with the support of friends and family through gift contributions.

Who is Sumday?

Sumday is the plan manager for the DreamAhead College Investment Plan. It provides investment management services, recordkeeping, online investing platform, and U.S.-based customer service. Sumday is owned by BNY Mellon, one of the world’s largest financial institutions; its core mission is to improve lives through investing. For more information, check out the Program Details Booklet.

Opening an Account

Who can open an account?

All U.S. persons (citizens and legal residents) over the age of majority* (unless a Custodian or Legal Guardian is named for a minor) with a Social Security Number or Taxpayer Identification Number can open an account for either themselves or for a beneficiary. You do not need to be a Washington State resident to have a DreamAhead account. 

*The age of majority is based on your state of residence. For most states it is 18, with the following exceptions: Alabama (19), Mississippi (21), Nebraska (19).

What do I need to open an account?

It only takes $25 to open an account and invest for the future. To get started, you’ll need your email and the information below for yourself, the beneficiary, and the successor owner (optional, but suggested): 

  • Name 
  • Home address
  • Phone number 
  • Date of birth 
  • Social Security Number

To set up the account, you will need:

  • To choose your investment(s)
  • Your bank account number and routing number 
  • To make an initial $25 contribution to the account
Do I have to live in the state of Washington to open an account?

No, all U.S. persons (citizens and legal residents) over the age of majority* with a Social Security Number or Taxpayer Identification Number can open an account for either themselves or for a beneficiary. 

*The age of majority is based on your state of residence. For most states it is 18, with the following exceptions: Alabama (19), Mississippi (21), Nebraska (19).

Who is the account owner?

The account owner is generally the person who opens the account. They own and manage the account for as long as they are the account owner. At any point, the account owner can add or change the beneficiary, change the account owner to someone else, or choose a successor owner to take over the account if something were to happen to them. A beneficiary can also be an account owner. If the account owner is a minor you must also name an account custodian.

What are the fees?

There are fees to keep each account up and running smoothly: 

  • Annual maintenance fee of $35 which is billed quarterly (an $8.75 service fee will appear on your account each quarter)
  • Asset management fees applied to your portfolio(s): between 0.255% and 0.400% of all investment assets (these fees happen in the background and won't appear in your activity feed)

Additional service-based fees are applied as follows:

  • Rollovers / Transfers out of plan: $25
  • ACH fail / Returned checks: $25
  • Statement delivery, per account, per year: $10
  • Paper check disbursement: $2.50
  • Overnight check or statements delivery: $15
  • To reissue checks: $15
  • Outgoing wires: $15
  • Requests for paper historical statements and postage incurred, if required: $10
Is there a minimum to open an account?

It only takes an initial $25 contribution to open an account and start saving. There is no enrollment fee.

Can I open more than one DreamAhead account?

Yes, you can open accounts for any number of beneficiaries, including yourself. Keep in mind that the combined total contribution of all the accounts for the same beneficiary cannot exceed the $500,000 limit. The $500,000 limit also applies on a combined basis if you also save with GET.

How do I change my info, like contact details, password, investments?

It’s easy to make changes online by signing in to your account.

  • To make changes to your address, password or email, sign in and go to your Profile.
  • To change the beneficiary, successor owner or other account information, navigate to your account and click the Settings tab.
  • For investments changes, go to the Investments tab to make updates.

If you don’t have an online account, you can send in a form requesting changes to your account.

If you need additional help, you can always contact customer service.

Who is the successor owner?

If you become legally incapacitated or die, your successor owner would take over all your rights, title and interest in the account.  You can designate a successor owner during enrollment or at a later date.  If you are familiar with the GET program, the term ‘successor owner’ has the same meaning as ‘account owner survivor.’

Who can access the account?

Only the account owner can sign in to their account with their email and password. For security reasons, don’t share your password or let someone else access your account. 

If you want to provide inquiry-only access for your DreamAhead account to your Financial Advisor, please complete the Authorization for Information Release form.

Beneficiary

Who can be a beneficiary?

A beneficiary can be your child, your grandchild, yourself, or any U.S. person with a Social Security Number or Tax Payer ID. The account owner and beneficiary can be the same person. An account can be transferred to another beneficiary, as long as they are considered an eligible member of the family of the original beneficiary.

Can a beneficiary have more than one account?

Yes, a beneficiary can be named on multiple accounts. Family and friends can open an account for a beneficiary or contribute to an existing account by making a gift contribution.

Keep in mind that the total contributions to all 529 savings accounts (DreamAhead and GET programs) in Washington State with the same beneficiary can’t go over the maximum contribution limit of $500,000. The balances are aggregated to monitor the maximum contribution limitation.

Can I transfer an account to another beneficiary?

Yes, you can change the beneficiary of an account by using the Change Beneficiary form as long as the new beneficiary qualifies as a "member of the family." Changing the beneficiary does not count toward your one-time rollover limit (in a 12-month period) or twice per calendar year investment change.

Who qualifies as a "member of the family"?

A “member of the family” is someone related to the beneficiary as follows: 

  • a son or daughter or a descendant of either
  • a stepson or stepdaughter or a descendant of either
  • a brother, sister, stepbrother or stepsister
  • the father or mother or an ancestor of either
  • a stepfather or stepmother
  • a son or daughter of a brother or sister
  • a brother or sister of the father or mother
  • a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law
  • the spouse of the beneficiary or of any of the other foregoing individuals
  • a first cousin of the beneficiary. 

For this purpose, a child includes a legally adopted child or a foster child and a brother or sister includes a half-brother or half-sister.

What if a beneficiary doesn’t go to college?

If the beneficiary decides that college is not in the future, you have three options:

You can stay invested. Your beneficiary may decide to attend school. There is no age limit for using the money in your account.

You can change your beneficiary to an eligible member of the original beneficiary’s family. 

You can withdraw your money for other uses. A 10% federal penalty tax on earnings will apply if you withdraw money for any reason other than to pay for qualified expenses. Exceptions to this penalty include a withdrawal made because the beneficiary:

  • Has died or become disabled.
  • Received a scholarship to an eligible education institution, to the extent the withdrawal amount doesn't exceed the scholarship amount.
  • Has enrolled in an eligible U.S. service academy, to the extent that the amount of the withdrawal doesn't exceed the value of the education. Eligible academies include the U.S. Military Academy, Naval Academy, Air Force Academy, Coast Guard Academy, and Merchant Marine Academy.

Additionally, any accumulated earnings that are withdrawn from your account must also be reported on the recipient's income tax return for the year in which they're distributed, and you may owe federal, state, and local income taxes.

Contact your tax advisor to determine how to report withdrawals for other uses.

What if my beneficiary is awarded a scholarship?

If your beneficiary receives a scholarship, you can make a withdrawal equal to the amount of the scholarship. Any earnings are subject to federal and applicable state and local income taxes, but are not subject to the additional 10% federal penalty tax, so long as the distribution does not exceed the scholarship amount.

How will having a DreamAhead account affect my financial aid?

If the parent or dependent student is the Account Owner, a DreamAhead account is considered an asset of the parent and treated more favorably than assets of a non-dependent student when determining eligibility for financial aid. Distributions from DreamAhead accounts owned by non-parents may be treated as student income the following year and have greater impact. You may want to consult your financial advisor or the financial aid office at your school.

Can I add multiple beneficiaries to an account?

No, each account can only have one beneficiary. You can open a separate account for a new beneficiary or change the beneficiary on an account at any time.

Adding to an Account

How does a DreamAhead account work?

When you open and set up an account online, it is securely connected to your bank account so you can easily make transfers of at least $5. You can make contributions, set up automatic monthly contributions, or make withdrawals for qualified expenses whenever you want; they usually take between 2–7 days to complete. The money you add will be invested based on the investment option(s) you choose.

How do I make contributions to an account?

With an online account, you can make contributions at any time or set up monthly transfers of at least $5 with your connected bank account(s).

Checks are also welcome. You can fill out a Contribution form and make your check payable to DreamAhead College Investment Plan. Then mail the contribution form and check to:

DreamAhead College Investment Plan
PO Box 9661
Providence RI 02940-9661

Please write your DreamAhead College Investment Plan account number in the memo line of the check.

If you would like to make a gift contribution to someone’s account, you can use the Gift form.

Are there any contribution limits?

There’s a $25 minimum to open an account and start saving. After that, all transactions (contributions, withdrawals, and monthly bank transfers) must be at least $5 per investment portfolio. Contributions are limited to $15,000 per transaction online. To contribute more than this please use a Contribution form.

There’s also maximum account balance limit of $500,000. Once your account balance reaches $500,000, you will not be permitted to make additional contributions unless your account balance falls below $500,000. Once at the $500,000 limit, your account can continue to grow past the $500,000 limit through investment earnings. The $500,000 limit applies on a combined basis if you also save with GET (Guaranteed Education Tuition). For example: if you save $86,000 with GET, you can contribute up to $414,000 with DreamAhead.

Can I make payroll deductions to contribute to my account?

Yes, please use the Payroll Deduction form. This form provides instructions on how to set up payroll deductions.

Can I contribute a refund from an eligible educational institution into my DreamAhead account?

Yes, you can make a re-contribution by using the Contribution form if the refund is from an eligible educational institution and it was originally used by the beneficiary to cover a qualified expense.

The re-contribution must be made within 60 days of receiving the refund and the amount must not exceed the refund amount. Due to COVID-19 the recontribution period is the later of 60 days from receipt of the refund or July 15.

Once the re-contribution is complete, it will not be considered as gross income for federal tax purposes; however, the original distribution will be reported on your 1099-Q federal tax form.

Investments

Where can I learn about the Investment Options?

You can read more about each investment option on the Investment options page.

What are my investment options?

There are plenty of options to choose from when it comes to saving for college. You can choose between Year of Enrollment or Static Portfolios, or a mix of both. Learn about each one before you make a decision.

  • Year of Enrollment portfolios use the beneficiary’s approximate year of enrollment in college to automatically adjust fund allocations over time. This means that the closer the beneficiary gets to the year of enrollment, the more conservative the portfolio’s allocation will become. Each Year of Enrollment portfolio can be customized to your risk tolerance.

    Compare Year of Enrollment portfolios

  • Static portfolios allow you to invest in specific funds based on your risk tolerance. Static investments don’t change allocations on their own, so it’s a good idea to review your selection over time.

    Compare Static portfolios

  • Adding to multiple portfolios is ideal for more advanced investors or for those who want to have more control over their investments. This option allows you to contribute to any combination of the Year of Enrollment and/or Static portfolios. For example, if a beneficiary plans on attending undergraduate and graduate school, you could contribute to two different Year of Enrollment portfolios to maximize the time before they enroll in each school.
Can I change my investment selection?

Yes. You may change your Investment Options up to two times per calendar year. 

There are two ways to adjust and/or change how your money is invested: 

  • You can sell your portfolio and use the money to purchase a new one. This will be considered an investment change and you can only do this up to twice a year. You can do this online or use an Investment Change form.

or 

  • You can keep your previous portfolio/s, but decide to put future contributions in a new investment option. This allows you to make adjustments over time without selling any portfolios. Please note, this does not count toward your twice per year limit on investment changes. You can do this online or use a Contribution form.

If you are invested in a Year of Enrollment Portfolio, the automatic reallocation of assets within the Year of Enrollment Portfolio based on the age of your beneficiary is not considered one of your twice per calendar year investment changes. 

Using an Account

How can I use a DreamAhead account?

Opening a DreamAhead account lets you save money with tax-free growth and withdrawals when you use your funds for qualified expenses.

What is considered a qualified expense?

Most costs related to a beneficiary’s higher education qualify as an eligible expense. These include Qualified Higher Education Expenses (QHEE) as defined by the IRS:

  • Tuition and fees at eligible educational institutions
  • Books and software
  • Supplies and equipment (e.g. computers, internet, printers, etc.)
  • Certain room and board expenses

Federal law also considers student loans (up to $10,000 lifetime), certain apprenticeship programs, and tuition at an elementary or secondary public, private or religious school (up to $10,000 annually) a qualified expense. 

Qualified withdrawals are tax-free so long as the total withdrawals for the year don’t exceed a beneficiary’s adjusted QHEE.

At what types of schools can I use DreamAhead?

You can use your DreamAhead account at nearly any public or private college, university or technical school in the United States and at selected colleges in other countries. A college is eligible if it participates in federal financial aid programs through the U.S. Department of Education. To view the hundreds of participating schools, visit the FAFSA website. You can also use your account to pay for tuition at an elementary or secondary public, private or religious school.

How do I withdraw money?

You can make withdrawals of at least $5 to a linked bank account from your account. Transfers usually take between 2–7 days to complete. If you have more than one investment, you’ll get to decide which investment to withdraw from.

You can also make direct payments online to an eligible educational institution to pay a bill or tuition by going to the "Transfers" tab and choosing "Withdrawal", or by using the Withdrawal form and mailing it to the address on the form.

The money should be used for qualified expenses.*

* Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as any applicable state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

Can I make direct payments from my account to my school?

Yes. You can have payments directly made out to any eligible educational institution to pay a bill or tuition online, or by using our Withdrawal form.

Can I use my account to pay for room and board expenses?

Yes, money from the account can be used to pay for room and board during the academic period the beneficiary is enrolled at an eligible educational institution (postsecondary schools only). Keep in mind that the amount must be within the allowed Cost of Attendance (COA).

Can I use my account to pay for computers, tablets, and other study tools?

As long as they are used by the beneficiary for educational purposes during the time of enrollment at an eligible educational institution (postsecondary schools only), they are considered qualified expenses.

Can I use the money for international schools?

Yes, if they are 529 eligible institutions and recognized by the U.S. Department of Education. You can double check your school here. Costs associated with some study abroad programs through U.S.-based higher education institutions may also qualify. If you are using the funds in your account to pay for eligible elementary and secondary tuition, the state law will determine whether international schools are included. Please consult your tax advisor.

Can I use a DreamAhead account for K-12 expenses?

Section 529 of the IRS code allows for tax-free distributions for tuition (up to $10,000 annually) at elementary and secondary public, private, and religious schools. Please note that DreamAhead investment options are specifically designed to save for qualified expenses at postsecondary schools. Please consult a tax advisor.

Can I use the money from my DreamAhead account and Coverdell Education Savings Account (ESA) to pay for expenses in the same year?

Yes, you can use money from both accounts for different qualified expenses. You can learn more about this in IRS Publication 970.

Is paying off a student loan a qualified expense?

On December 20, 2019, a federal spending bill was signed containing provisions allowing 529 plan account owners to withdraw assets to pay principal and interest on certain qualified education loans for the beneficiary of your account or any of the beneficiary’s siblings. The loan repayment provisions apply to repayments up to $10,000 per individual. This $10,000 is a lifetime amount, not an annual limit.

Can I use my account to pay for apprenticeship programs?

On December 20, 2019, a federal spending bill was signed containing provisions allowing 529 plan account owners to withdraw assets to pay for certain expenses associated with apprenticeship programs registered and certified by the Secretary of Labor under the National Apprenticeship Act.

What if a college sends me a refund?

College students and parents who receive refunds for tuition, room and board, or other qualified expenses can re-contribute their refund back into their DreamAhead Account within 60 days of the date of the refund to avoid paying any penalty or taxes on the earnings. Due to COVID-19 the recontribution period for Spring 2020 is the later of 60 days from receipt of the refund or July 15. Be sure to check IRS Publication 970 to see how a refund may be treated under the law.

Gifting

How does gifting work?

Friends and family can make gift contributions to help a beneficiary’s account grow. Once a Gifting Page is set up for a DreamAhead account, you will receive a custom link when it’s live. You can follow the instructions online to make a direct contribution of at least $5 to a beneficiary’s account.

Online gifting is limited to $15,000 per transaction. If you want to contribute more than that amount, you can fill out a Gift form. Simply include a check of at least $5 when you mail the form and give the detachable gift receipt to the beneficiary for their records.

What are the federal estate and gift tax benefits?

People making gift contributions might benefit from an annual federal gift tax exclusion of $15,000 per donor ($30,000 for married contributors) by reducing the taxable value of an estate. Any additional contributions can be treated up to $75,000 (or $150,000 for joint filers) as having been made over a period of up to five years for federal gift tax exclusion.*

* In the event the donor does not survive the 5-year period, a prorated amount will revert back to the donor's taxable estate.

How can friends and family help a beneficiary save for college?

Anyone can open an account for a beneficiary by signing up online or they can make a gift contribution online or by using the Gift form.

Rollovers

Can I roll over assets from another 529 college savings plan into my DreamAhead account?

You can roll over funds from another 529 plan account into your DreamAhead account for the same beneficiary without federal income tax consequences (including the 10% federal penalty tax) if you do so after 12 months from the date of a previous rollover for the same beneficiary to any 529 plan. 

You may also roll over money from another 529 plan account into your account without federal income tax consequences at any time when you change beneficiaries, provided that the new beneficiary is a member of the family of the old Beneficiary.

To start a rollover, open a new DreamAhead account and fill out the Rollover form or learn how to start a GET rollover.

How do I roll over a GET account into a DreamAhead account?

If you have a GET account, simply sign in to your online GET profile to start the rollover process into a DreamAhead account.* For more details about the GET rollover process, check out the GET Rollovers page.

You must roll over the entire balance of the GET account into the new DreamAhead account. All the information about the account and beneficiary will be matched seamlessly to a new (or existing) DreamAhead account. 

The rollover is all managed online, without having to fill out paper forms. A rollover from your GET account to a DreamAhead account is considered a rollover for purposes of the once per 12-month rollover limitation.

Can I contribute funds from a Coverdell Education Savings Account (ESA) to a DreamAhead account?

Yes, you can use the Rollover form to indicate which assets were liquidated from an Education Savings Account (Coverdell ESA). Unlike UGMA/UTMA accounts, the Beneficiary may be changed to a Member of the Family of the beneficiary of an ESA. Making distributions from an ESA to fund an account for the same beneficiary is not a taxable transaction. Consult your tax advisor for more information.

Can I transfer assets from an UGMA/UTMA account to my DreamAhead account?

Yes, you can use the Rollover form to get started or if you have a GET account, you can do it online.You should consult a qualified tax advisor with respect to the contribution of UGMA/UTMA custodial assets and the implications of such a contribution.

What is the Uniform Gifts to Minors Act (UGMA)?

The Uniform Gifts to Minors Act and the Uniform Transfer to Minors Act (UTMA) allow minors to own assets (like stocks, bonds, mutual funds, annuities, or insurance policies) without an attorney needing to set up a special trust fund.

Can I roll over assets from my DreamAhead account into another college savings plan?

You can roll over part of or all of the DreamAhead account’s funds into a new 529 college savings plan by filling out a rollover form from the new 529 plan. Keep in mind that once liquidated, your DreamAhead account will remain open unless you decide to close it. 

You can make one rollover per 12-month period without being taxed.

Please note, there is a $25 rollover fee.  

Tax Benefits

What are the state and federal tax advantages?

The money in a DreamAhead grows tax-deferred and withdrawals are tax-free when used for qualified expenses. There are no state tax benefits in the state of Washington.

Are contributions federal tax deductible?

No, contributions to a 529 plan are not deductible on your federal taxes.

How are withdrawals for non-qualified expenses taxed?

A 10% federal penalty tax on earnings will apply if you withdraw money for any reason other than to pay for qualified expenses.  Exceptions to this penalty include a withdrawal made because the beneficiary:

  • Has died or become disabled.
  • Received a scholarship to an eligible education institution, to the extent the withdrawal amount doesn't exceed the scholarship amount.
  • Has enrolled in an eligible U.S. service academy, to the extent that the amount of the withdrawal doesn't exceed the value of the education. Eligible academies include the U.S. Military Academy, Naval Academy, Air Force Academy, Coast Guard Academy, and Merchant Marine Academy.

Additionally, any accumulated earnings that are withdrawn from your account must also be reported on the recipient's income tax return for the year in which they're distributed, and you may owe federal, state, and local income taxes.

Contact your tax advisor to determine how to report withdrawals for other uses.

What are some non-qualified expenses that are not penalized?

There are certain instances when non-qualified higher education expenses are not penalized. This could happen when a beneficiary inherits a 529 plan, becomes permanently disabled or dies, receives a tax-free scholarship, or attends a U.S. service academy. You will still owe income taxes on the earnings, but there will be no additional 10% penalty.

Are contributions made pre-tax or after-tax?

Contributions are always made after-tax.

Is there a state income tax deduction?

There is no state income tax deduction for the state of Washington.

Can I claim a HOPE/American Opportunity Credit or a Lifetime Learning Credit for qualified tuition and other related expenses?

If a beneficiary or parent is eligible, they can apply for a Hope Scholarship Credit or Lifetime Learning Credit for certain qualified expenses. There are certain restrictions that don’t allow you to claim a credit for the same qualified expenses used to figure the tax-free portion of a withdrawal from your DreamAhead account. Learn more in IRS Publication 970.

News from the Nest

You can use funds from your GET or DreamAhead account to pay down existing student loans.

>> Learn more Learn More

Due to COVID-19 restrictions, the WA529 office is currently closed to walk-in visitors. If you have questions about your GET or DreamAhead account, Contact Center representatives are available by phone or email. Please see our Contact Us page for hours and information. The GET and DreamAhead Contact Centers will be closed on Friday, December 25, 2020 for Christmas Day and Friday, January 1, 2021 for New Year's Day. 

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