Invested 529 plan

Invested 529 plan

There are many ways to save for college and many choices to make. The InvestEd – 529 Education Savings Plan makes saving simple.

Benefits information

Control, flexibility and transferability

When you open an Ivy Funds InvestEd 529 Plan account, you are the "owner" of the account for the benefit of your selected beneficiary, such as your child, grandchild, niece or nephew. So, if your selected beneficiary chooses not to go to college, you can simply transfer the account to another direct family member of the beneficiary or if you simply want to change the beneficiary you may. Also, any U.S. citizen or resident, including your friends or relatives, can contribute to an Ivy Funds InvestEd 529 Plan account.

High contribution limits, no income restrictions

With the Ivy Funds InvestEd 529 Plan, you can make contributions, until a maximum balance of $396,000 (2013-2014 academic year) is reached for all Program accounts per beneficiary. Plus, there are no income restrictions on the account owner, so you'll remain eligible to maintain your Ivy Funds InvestEd 529 Plan account regardless of your income.

Tax advantages

Earnings in your Ivy Funds InvestEd 529 Plan account grow federal income tax-deferred. And all withdrawals are federal income tax-free if they are applied to qualified higher education expenses, such as tuition, fees, room and board, and books. Please note that state and local taxes may apply. States may offer some tax breaks such as a deduction for contributions or income exemption on withdrawals.This information is based on current tax laws, regulations, rules and interpretations, which are subject to change at any time. Please consult your tax advisor regarding your individual circumstances.

The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency or purpose for or timing of distributions. Taxes are deferred until withdrawal. The earnings portion of a non-qualified withdrawal is subject to a 10% penalty as well as federal and/or state taxes.

Estate planning advantages

Especially important for grandparents or other relatives, contributions to an Ivy Funds InvestEd 529 Plan account are excluded from the donor's taxable estate for federal tax purposes (assuming the donor is not the beneficiary). Thanks to the annual gift tax exclusion, grandparents, other relatives and friends can contribute up to $70,000 ($140,000 for married couples) to each beneficiary and spread the contribution over five years for gift tax purposes, as long as they do not make additional contributions to the same beneficiary during the five years, by making an election on the federal gift tax return. Please remember that if the contributor dies before the end of the five-year period, the portion of the gift allocable to the years remaining in the five-year period would be in the contributor's estate for federal estate tax purposes.

It's easy to get started

You can become Ivy Funds InvestEd 529 Plan with as little as $750, or you can start with only $150 per fund and subsequently, a minimum of $50 per month if you contribute that amount regularly with an automatic investment plan created through the Ivy Funds InvestEd 529 Plan's Automatic Investment Service (AIS). As with any investment, there can be no assurance that periodic purchases using AIS will produce a profit or protect against investment loss in declining markets.

Investors should consider the investment objectives, risks, charges and expenses associated with the InvestEd Plan carefully before investing. This and other information is found in the InvestEd Portfolios prospectus, and the Ivy Funds prospectus, the Ivy Funds InvestEd 529 Plan Program Overview, and the Ivy Funds InvestEd 529 Plan Account Application. Please encourage your clients to read the prospectus carefully before investing. An investor should also consider, before investing whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's 529 college savings plan.

Investment return and principal value will fluctuate, and it is possible to lose money by investing.

The Ivy Funds InvestEd 529 Plan is offered by Waddell & Reed, Inc. as part of the Arizona Family College Savings Program (the "Program"). Waddell & Reed, Inc. is one of multiple financial institutions eligible to offer investments under the Program. Accounts are not insured by the State of Arizona, the Trust, the Arizona Commission for Postsecondary Education, or any other governmental entity, Waddell & Reed, Inc., or any affiliated or related party, and neither the principal deposited nor the investment return is guaranteed by any of the above referenced parties.

The InvestEd Portfolios are managed by Waddell & Reed Investment Management Company, while the Ivy Funds are managed by Ivy Investment Management Company, both of which are affiliates of Waddell & Reed, Inc. InvestEd Portfolios and the Ivy Funds are distributed by Waddell & Reed, Inc., and Ivy Funds Distributor, Inc., respectively.

The Ivy Funds InvestEd 529 Plan offers multiple investment options, including sixteen Individual Fund Portfolios, three Age-Based Portfolios, and three Static Portfolios.

The Age-Based Portfolios are based on a beneficiary's college time horizon and seek an appropriate level of investment risk for that time horizon. Organized as a "fund of funds", the Age-Based Portfolios help diversify your investment among a variety of mutual funds within the Waddell & Reed Advisors Funds family. The Age-Based Portfolios consist of: the Growth Portfolio (ages 0 through 8), the Balanced Portfolio (ages 9 through 15) and the Conservative Portfolio (ages 16 and older). Each portfolio is a series of InvestEd Portfolios, a mutual fund registered under the Investment Company Act of 1940.

The Age-Based Portfolios are designed to invest in mutual funds with greater exposure to equity investments when the named beneficiary is between the ages of 0 through 8, a more balanced exposure to equity and fixed income investments when the named beneficiary is between the ages of 9 through 15, and a greater exposure to fixed income securities when the beneficiary reaches the age of 16 and is closer to commencing his or her postsecondary education. The balance in an Ivy Funds InvestEd 529 Plan account is automatically exchanged to a different Age-Based Portfolio within approximately thirty (30) days of the beneficiary's 9th and 16th birthdays.

The Static Portfolios option offers three actively managed portfolios allowing you to stay in the portfolio of your chosen risk tolerance, whether it be growth, balanced or conservative, regardless of beneficiary’s college time horizon.

Individual Mutual Funds

IASEX Asset Strategy
IVBEX Bond
ICFEX Core Equity
ICVEX Cundill Global Value
IDIEX Dividend Opportunities
IIBEX Global Income Allocation
IGNEX Global Natural Resources
IVHEX High Income
IICEX International Core Equity
ILCEX Large Cap Growth
IVLEX Limited-Term Bond
IMCEX Mid Cap Growth
IVEXX Money Market
IREEX Real Estate Securities
ISTEX Science and Technology
ISGEX Small Cap Growth

Aged-Based & Static PortfoliosEquityBond & Income-Producing

Investors should consider the investment objectives, risks, charges and expenses associated with the Ivy Funds InvestEd 529 Plan carefully before investing. This and other information is found in the InvestEd Portfolios prospectus, and the Ivy Funds prospectus, the Ivy Funds InvestEd 529 Plan Program Overview, and the Ivy Funds InvestEd 529 Plan Account Application. Please encourage your clients to read the prospectus carefully before investing. An investor should also consider, before investing whether the investor's or Designated Beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's 529 college savings plan.

Investment return and principal value will fluctuate, and it is possible to lose money by investing.

The Ivy Funds InvestEd 529 Plan is offered by Waddell & Reed, Inc. as part of the Arizona Family College Savings Program (the "Program"). Waddell & Reed, Inc. is one of multiple financial institutions eligible to offer investments under the Program. Accounts are not insured by the State of Arizona, the Trust, the Arizona Commission for Postsecondary Education, or any other governmental entity, Waddell & Reed, Inc., or any affiliated or related party, and neither the principal deposited nor the investment return is guaranteed by any of the above referenced parties.

The InvestEd Portfolios are managed by Waddell & Reed Investment Management Company, while the Ivy Funds are managed by Ivy Investment Management Company, both of which are affiliates of Waddell & Reed, Inc. InvestEd Portfolios and the Ivy Funds are distributed by Waddell & Reed, Inc., and Ivy Funds Distributor, Inc., respectively.

Q. What if my child (or Designated Beneficiary) receives a scholarship?
A. If your child or designated beneficiary receives a scholarship for higher education, the account owner may withdraw an equal amount from your Ivy Funds InvestEd 529 Plan. Although you would pay taxes on the earnings portion of the withdrawal, you would have no federal tax penalties associated with the withdrawal. Withdrawal amounts that exceed the amount of the scholarship that you DON'T use for qualified higher education expenses of the designated beneficiary will be subject to income taxation on the earnings portion. You may also incur an additional 10% federal penalty on the earnings.1 The taxes will generally be applied at the tax rate of the person for whose benefit the withdrawal is made.
Q. What if my child doesn't go to college?
A. One of the advantages of 529 plans is that account owners can change beneficiaries without penalty. If your child chooses not to go to college, you can change beneficiaries without penalty, as long as the new designated beneficiary is a member of the original designated beneficiary's family, as defined by the tax laws.2 If you choose to withdraw the money you have accumulated in your Ivy Funds InvestEd 529 Plan account for non-qualified expenses instead of passing it onto a new designated beneficiary, the earnings portion of the non-qualified withdrawal generally will be subject to income tax at the tax rate of the person for whose benefit the withdrawal is made. In addition, a 10% penalty on the earnings will apply.2
Q. Does the Ivy Funds InvestEd 529 Plan offer estate-planning benefits?
A. Contributions to the Ivy Funds InvestEd 529 Plan can generally be excluded from your taxable estate because the government considers them as completed gifts for federal gift and estate tax purposes.
Account owners can contribute up to $65,000 (or $130,000 per couple filing jointly) without gift tax consequences if an election is made by the account owner to treat the gift as a contribution made in equal payments over a five-year period. If the election is made, gifts made by the account owner to the designated beneficiary during the five-year period may not exceed $65,000 without federal gift tax consequences. To qualify, the account owner will need to file IRS Form 709 to treat the gift as if it were made in equal payments over a five-year period. In addition, if the account owner dies before the end of the five-year period, the portion of the gift allocable to the years remaining in the five-year period would be included in the account owner's estate for estate tax purposes.The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency or purpose for or timing of distributions. Taxes are deferred until withdrawal. The earning portion of a non-qualified withdrawal is subject to a 10% penalty as well as federal and/or state taxes.
Q. I'm invested in another 529 plan. Can I transfer my account to an Ivy Funds InvestEd 529 Plan?
A. Yes, transferring from one 529 plan to another requires completing a 529 Plan Transfer Request Form. You may generally roll over an account without limit if the new account appoints a new designated beneficiary.3 In addition, you may roll over an account with the same designated beneficiary one time during a 12-month period.
Q. Are the Ivy Funds InvestEd 529 Plan investments guaranteed?
A. No. To become more familiar with the risks involved in investing in the Ivy Funds InvestEd 529 Plan, please carefully review the Ivy Funds InvestEd 529 Plan information contained in this section, including the Ivy Funds InvestEd 529 Plan Program Overview, the InvestEd Portfolios prospectus, and the Ivy Funds prospectus.
Q. Can I still contribute to my Designated Beneficiary's Coverdell Education Savings Account?
A. Yes. Account owners can contribute to both a Coverdell Education Savings Account and a 529 plan in the same year for the same designated beneficiary without penalty, subject to contribution limits.
Q. Do I have to select a college now?
A. No, but you may want to consider the type of post-secondary education the designated beneficiary plans to pursue.This may be of assistance in determining the amount the designated beneficiary may need for qualifying expenses.
Q. Can I borrow money against my Ivy Funds InvestEd 529 Plan account?
A. No. Interest in the account may not be pledged as security for any kind of loan.
Q. Can my spouse and I set up a joint account?
A. No. One person must establish each Ivy Funds InvestEd 529 Plan account; however, anyone may contribute to the plan once it is established. For example, parents, grandparents, other relatives and friends may pool contributions in one designated beneficiary's account. Although only one person may be indicated as the account owner, a successor account owner should be designated on the Ivy Funds InvestEd 529 Plan account application in the event of the account owner's death.4
Q. Can organizations establish Ivy Funds InvestEd 529 Plan scholarship programs?
A. Not-for-profit entities, such as 501c(3) organizations and state and local governments have the ability to set up scholarship accounts within the Ivy Funds InvestEd 529 Plan. There are many reasons that not-for-profit entities may find Ivy Funds InvestEd 529 Plan scholarship accounts attractive. No designated beneficiary is named at the time a scholarship account is set up. In addition, there's no maximum contribution limit. At the time the scholarship is awarded, the organization simply completes a transfer of ownership form for the portion of the account they wish to grant to any given recipient. This recipient must use the money for higher education expenses.
Q. Who manages the Ivy Funds InvestEd 529 Plan?
A. The Ivy Funds InvestEd 529 Plan is offered by Waddell & Reed, Inc. as program manager of the Arizona Family College Savings Program (the "Program"). Waddell & Reed, Inc. is one of multiple financial institutions eligible to offer investments under the Program. The InvestEd Portfolios are managed by Waddell & Reed Investment Management Company, while the Ivy Funds are managed by Ivy Investment Management Company, both of which are affiliates of Waddell & Reed, Inc.
Q. Is there a minimum amount I must invest to open an Ivy Funds InvestEd 529 Plan account?
A. To open an Ivy Funds InvestEd 529 Plan account, the minimum initial investment is $750 per fund, and subsequent investments do not have a limit. To establish an account with an automatic monthly investment or Automatic Investment Service (AIS), the initial opening account minimum is $150 per fund, and subsequently, a minimum of $50 per month. To establish an account through payroll deduction or salary deferrals, there are no account minimums. As with any investment, there can be no assurance that periodic purchases using AIS will produce a profit or protect against investment loss in declining markets. You may open accounts with cash equivalents. Redemptions from other accounts may be taxable transactions.
Q. How do I make a withdrawal from my Ivy Funds InvestEd 529 Plan account?
A. An account owner may withdraw money from an Ivy Funds InvestEd 529 Plan account by completing the appropriate forms. Withdrawals will be classified as either qualified or non-qualified. A qualified withdrawal is a withdrawal used for "qualified higher education expenses," which may include tuition, fees, books, supplies and equipment required for the enrollment or attendance of a designated designated beneficiary at an eligible educational institution. The term also includes qualified room and board expenses for students who attend an eligible educational institution at least half time. A non-qualified withdrawal is a withdrawal is not used for qualified higher education expenses. Non-qualified withdrawals are generally subject to income taxes on the earnings portion of the withdrawal and an additional federal tax penalty of 10% on the earnings. You may also make penalty-free withdrawals if the designated beneficiary receives a scholarship, dies or becomes permanently disabled. There would be a tax on the earnings portion of this type of withdrawal. Please consult your tax advisor for more information about your individual circumstances. To make any withdrawal from your Ivy Funds InvestEd 529 Plan account, you must complete an Ivy Funds InvestEd 529 Plan Withdrawal Form.
1. The earnings portion of any non-qualified withdrawals (i.e., generally those not used for qualified higher education expenses) is subject to a federal tax and possibly state tax. In addition, the earnings portion of a non-qualified withdrawal is subject to an additional federal penalty in the form of an additional 10% tax on the earnings portion of the withdrawal. The 10% penalty does not generally apply to certain distributions made after the death or disability of the designated beneficiary or after the receipt of certain scholarships.
2. There may be federal gift or generation skipping transfer tax consequences if the new designated beneficiary is a member of a younger generation than the prior designated beneficiary.
3. Although the U.S. Department of Education has advised several 529 plans regarding the treatment of accounts in 529 plans for financial aid purposes, the treatment is subject to change by regulations, legislation or otherwise. Specific educational institutions may also treat 529 plan investments in a different manner. Accounts for which the designated beneficiary is also the account owner may be treated as if it were an asset of the parent for financial aid purposes.
4. The tax treatment and state law probate treatment of the designation of a successor account owner and the transfer of ownership to such successor is not certain and may vary depending on the particular facts and state law involved.

Investors should consider the investment objectives, risks, charges and expenses associated with the InvestEd Plan carefully before investing. This and other information is found in the InvestEd Portfolios prospectus, and the Ivy Funds prospectus, the Ivy Funds InvestEd 529 Plan Program Overview, and the Ivy Funds InvestEd 529 Plan Account Application. Please encourage your clients to read the prospectus carefully before investing. An investor should also consider, before investing whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's 529 college savings plan.

Investment return and principal value will fluctuate, and it is possible to lose money by investing.

The Ivy Funds InvestEd 529 Plan is offered by Waddell & Reed, Inc. as part of the Arizona Family College Savings Program (the "Program"). Waddell & Reed, Inc. is one of multiple financial institutions eligible to offer investments under the Program. Accounts are not insured by the State of Arizona, the Trust, the Arizona Commission for Postsecondary Education, or any other governmental entity, Waddell & Reed, Inc., or any affiliated or related party, and neither the principal deposited nor the investment return is guaranteed by any of the above referenced parties.

The InvestEd Portfolios are managed by Waddell & Reed Investment Management Company, while the Ivy Funds are managed by Ivy Investment Management Company, both of which are affiliates of Waddell & Reed, Inc. InvestEd Portfolios and the Ivy Funds are distributed by Waddell & Reed, Inc., and Ivy Funds Distributor, Inc., respectively.

Interested in opening an Ivy Funds InvestEd 529 Plan account?

Investing is about making wise decisions. It begins with selecting a skilled financial advisor who will partner with you to determine the right investments -- ones that have demonstrated themselves over time through many market cycles -- to help you meet your long-term goals. Ivy Funds InvestEd 529 Plan offers these kinds of investments. Talk to your advisor today about setting up an Ivy Funds InvestEd 529 Plan account.

Already an Ivy Funds InvestEd 529 Plan account holder or need additional information?

If you have questions, comments or concerns about your Ivy Funds InvestEd 529 Plan account, please contact our client services department.

Toll-free Phone Number

1.800.777.6472
Automated account access and fund information are available 24 hours a day. Client service representatives are available 7:30 a.m. to 7 p.m. CST, Monday through Friday.

Toll-free Fax

1.800.532.2749

Email

E-mail your comments or questions

Postal Address

InvestEd Client Services
Post Office Box 29217
Shawnee Mission, KS 66201-9217

Investors should consider the investment objectives, risks, charges and expenses associated with the InvestEd Plan carefully before investing. This and other information is found in the InvestEd Portfolios prospectus, and the Ivy Funds prospectus, the Ivy Funds InvestEd 529 Plan Program Overview, and the Ivy Funds InvestEd 529 Plan Account Application. Please encourage your clients to read the prospectus carefully before investing. An investor should also consider, before investing whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's 529 college savings plan.

Investment return and principal value will fluctuate, and it is possible to lose money by investing.

The Ivy Funds InvestEd 529 Plan is offered by Waddell & Reed, Inc. as part of the Arizona Family College Savings Program (the "Program"). Waddell & Reed, Inc. is one of multiple financial institutions eligible to offer investments under the Program. Accounts are not insured by the State of Arizona, the Trust, the Arizona Commission for Postsecondary Education, or any other governmental entity, Waddell & Reed, Inc., or any affiliated or related party, and neither the principal deposited nor the investment return is guaranteed by any of the above referenced parties.

The InvestEd Portfolios are managed by Waddell & Reed Investment Management Company, while the Ivy Funds are managed by Ivy Investment Management Company, both of which are affiliates of Waddell & Reed, Inc. InvestEd Portfolios and the Ivy Funds are distributed by Waddell & Reed, Inc., and Ivy Funds Distributor, Inc., respectively.