College Save in North Dakota: 529 Plan Basics

College GirlA 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. Legally known as “qualified tuition plans,” 529 plans are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code. All 50 states and the District of Columbia sponsor at least one type of 529 plan. In addition, some private colleges and universities sponsor a pre-paid tuition plan.

Bank of North Dakota administers North Dakota’s 529 plan, College SAVE. This higher education savings plan provides many advantages for students (and their families) pursuing a college education. The North Dakota College SAVE plan offers:

• Valuable tax benefits: Earnings from College SAVE accounts are exempt from federal and state income tax when used for qualified withdrawals. In addition, North Dakota taxpayers can deduct up to $5,000 in contributions to their College SAVE account (up to $10,000 if married, filing jointly) from their state taxable income.

• Low minimum; generous maximum: Participants can open a College SAVE account with as little as $25 and contribute up to $269,000.

• Range of investments from Vanguard: By investing with College SAVE, you have access to a range of investment options managed by Vanguard, one of the nation’s leading mutual fund managers.

James Barnhardt, College SAVE administrator for Bank of North Dakota, explains that anyone from parents, grandparents, aunts, uncles, to family friends can contribute to a College SAVE account. It’s a great gift idea. “And if they are a resident, they can also get the in-state tax deduction every year up to $5,000 for single filers and $10,000 for married filers,” says Barnhardt. North Dakota offers two grant programs for 529 plan participants:

• Matching grant opportunity: College SAVE investors who are North Dakota residents, and who earn less than $30,000 annually ($60,000 if married, filing jointly), may qualify for a matching grant of up to $500 for three consecutive years. North Dakota residents who earn less than $60,000 annually ($100,000 if married, filing jointly), may qualify for a one-time matching grant of up to $500. Match funds are available for the first 1,000 North Dakota applicants each calendar year, so apply early.

• Children FIRST: Bank of North Dakota will contribute the first $100 for college through a Children FIRST grant into a College SAVE account. The North Dakota newborn need only be 12 months old or younger. Funds must be matched by the time the child turns 4 years old. “As soon as we get a Children FIRST application, we verify it and then deposit the $100 into the account,” says Barnhardt. The account holder has until the child’s fourth birthday to match the deposited funds in order to keep the contribution.

These matching grant programs are a wonderful opportunity to grow your college savings account. “Not many states have the funding to offer a match,” says Barnhardt. For additional information, visit College SAVE’s full-service website at

Filed Under: Money & Consumer

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