Ivy InvestEd 529 Plan
There are many ways to invest for higher education, thus a great deal of choices to consider. The Ivy InvestEdSM 529 Plan, a college savings plan, is designed to help make preparing for future simple.Download Ivy InvestEd 529 Program Overview
Control, flexibility and transferability
When you open an Ivy 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 InvestEd 529 Plan, an education savings account.
High contribution limits, no income restrictions
With the Ivy InvestEd 529 Plan, you can make contributions, until a maximum balance of $453,000 (2017-2018 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 InvestEd 529 Plan account regardless of your income.
Earnings in your Ivy 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 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 $14,000 gift tax exclusion ($28,000 in the case of a married couple), it is possible for grandparents, other relatives and friends to contribute substantial amounts to an account without incurring any gift tax. An election can be made (on the federal gift tax return) to spread 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 that five-year period. 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. Consult your CPA or other tax advisor regarding the impact of gift, estate, and other tax consequences.
It's easy to get started
You can open an Ivy InvestEd 529 Plan with as little as $250 per fund, and subsequent investments do not have a minimum. You can also start with only $150 per fund and subsequently, a minimum of $50 per month, if you establish an automatic monthly investment or Automatic Investment Service (AIS). Additionally, if you establish an account through payroll deduction or salary deferrals, there are no account minimums. Periodic investment programs like AIS cannot guarantee a profit or protect against investment loss in a declining market.
The Ivy InvestEd 529 Plan offers multiple investment options, including six age-based portfolios and static portfolios, and 20 individual fund portfolios.
Ivy InvestEd 529 Plan Glide Path
When you establish an Ivy Invested 529 Plan, one of your options is to select one of six portfolios based on the age of your beneficiary. These age-based portfolios have been developed to seek diversification and appropriate asset allocation based upon the approximate time horizon until the funds are needed to pay for the designated beneficiary’s qualified higher education expenses. Each portfolio has a different level of equities and fixed-income securities (see chart in the Static Portfolios section that follows) so that as the designated beneficiary ages your investments will move to a gradually more conservative portfolio in an effort to help reduce the risk of loss when capital preservation is needed most. Organized as actively managed “fund of funds,” these portfolios help diversify your investments among a variety of mutual funds within the Ivy Funds family (and/or the Waddell & Reed Advisors Funds family, as applicable).
The balance is automatically exchanged to a different age-based portfolio within approximately 30 days of the designated beneficiary’s 5th, 9th, 12th, 15th and 19th birthdays.
A second option available to you in the Ivy InvestEd 529 Plan allows you to invest in a static portfolio that is outside the age range of the designated beneficiary. However, by so doing, your account will not participate in the automatic exchange feature. The static portfolios option offers the same six actively managed age-based portfolios, but allows the account owner to stay in the portfolio of his or her chosen risk tolerance, regardless of the designated beneficiary's higher education time horizon, and without automatically transferring to the next age-based portfolio. If you choose this option, you may forfeit some of the benefits of diversification and risk management sought by the age-based portfolio option.
Diversification and asset allocations are techniques to help manage risk, it cannot guarantee a profit or protect against loss in a declining market.
Ivy InvestEd 529 Plan Age-Based & Static Portfolios
0 - 4 YEARS OLD
58% U.S. Equity
32% International Equity
10% Fixed Income
5 - 8 YEARS OLD
49% U.S. Equity
26% International Equity
25% Fixed Income
12 - 14 YEARS OLD
27% U.S. Equity
13% International Equity
60% Fixed Income
15 - 18 YEARS OLD
18% U.S. Equity
7% International Equity
75% Fixed Income
Individual Fund Portfolios
When you establish an Ivy InvestEd 529 Plan, a third option is that you may elect to invest in an individual fund portfolio. The 20 individual fund portfolios offered by the plan invest in a single mutual fund (an “underlying mutual fund”), including U.S. Equity Funds, Global/International Equity Funds, Fixed-Income Funds, and Specialty Funds from the Ivy Funds family.
Ivy InvestEd 529 Performance
All Ivy InvestEd 529 Plan investment options except the Ivy Government Money Market Fund shares are charged a front-end sales load of 2.50% for purchases up to $250,000. Ivy Government Money Market Fund does not have a front-end sales load. For Breakpoints and Rights of Accumulation see the Ivy InvestEd 529 Plan Program Overview. An annual $20 account maintenance fee is not included in the calculations.
You could lose money by investing in the Ivy Government Money Market Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
Prices & Returns
POP as of 9/22/2017
Average Annual Total Returns
POP as of 8/31/2017
|WAGPX||InvestEd Aggressive Portfolio||$10.00||$0.00||—||—||—||—||—||—||9/18/2017||1.02%||1.02%|
|WBLAX||InvestEd Balanced Portfolio||$12.09||$0.01||12.36%||4.85%||2.55%||6.63%||4.49%||5.59%||10/1/2001||0.96%||0.96%|
|WICAX||InvestEd Conservative Portfolio||$10.78||$0.01||6.10%||1.50%||0.67%||4.00%||4.28%||4.08%||10/1/2001||0.91%||0.91%|
|WFXPX||InvestEd Fixed Income Portfolio||$10.00||$0.01||—||—||—||—||—||—||9/18/2017||0.78%||0.78%|
|WAGRX||InvestEd Growth Portfolio||$12.58||$0.01||16.48%||7.82%||4.21%||9.11%||5.79%||6.96%||10/1/2001||1.02%||1.02%|
|WICPX||InvestEd Income Portfolio||$10.00||$0.01||—||—||—||—||—||—||9/18/2017||0.86%||0.86%|
What if my child (or designated beneficiary) receives a scholarship?
If your child or designated beneficiary receives a scholarship for higher education, the account owner may withdraw an equal amount from your Ivy 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.
What if my child doesn't go to college?
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. If you choose to withdraw the money you have accumulated in your Ivy 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
Does the Ivy InvestEd 529 Plan offer estate-planning benefits?
Contributions to an Ivy InvestEd 529 Plan account are generally excluded from the donor's taxable estate for federal tax purposes (assuming the donor is not the beneficiary). Thanks to the annual $14,000 gift tax exclusion ($28,000 in the case of a married couple), it is possible for grandparents, other relatives and friends to contribute substantial amounts to an account without incurring any gift tax. An election can be made (on the federal gift tax return) to spread 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 that five-year period. 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. Consult your CPA or other tax advisor regarding the impact of gift, estate, and other tax consequences.
I'm invested in another 529 plan. Can I transfer my account to an Ivy InvestEd 529 Plan?
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. In addition, you may roll over an account with the same designated beneficiary one time during a 12-month period.3
Are the Ivy InvestEd 529 Plan investments guaranteed?
No. Investments into 529 plans, including the Ivy InvestEd 529 Plan, are not guaranteed by the State of Arizona, the Arizona Commission for Postsecondary Education, Waddell & Reed, Inc., Ivy Distributors, Inc., or any affiliated or related party. All investments involve a certain degree of risk. The value of an Ivy InvestEd 529 Plan account will depend upon the performance of the investment portfolios in which the account is invested and will fluctuate. It is possible that the value of your account may be less than the amount you invested.
To become more familiar with the risks involved in investing in the Ivy InvestEd 529 Plan, please carefully review the Ivy InvestEd 529 Plan information contained in this section, including the Ivy InvestEd 529 Plan Program Overview and the Ivy Invested Portfolios Prospectus.
Can I still contribute to my Designated Beneficiary's Coverdell Education Savings Account?
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.
Do I have to select a college now?
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.
Can I borrow money against my Ivy InvestEd 529 Plan account?
No. Interest in the account may not be pledged as security for any kind of loan.
Can my spouse and I set up a joint account?
No. One person must establish each Ivy 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 InvestEd 529 Plan account application in the event of the account owner's death.4
Can organizations establish Ivy InvestEd 529 Plan scholarship programs?
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 InvestEd 529 Plan. There are many reasons that not-for-profit entities may find Ivy 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.
Who manages the Ivy InvestEd 529 Plan?
The Ivy InvestEd 529 Plan is offered by Waddell & Reed, Inc. as program manager of the Arizona Family College Savings Program Trust Fund, a 529 plan administered by the Arizona Commission for Postsecondary Education (the "Program”). Waddell & Reed, Inc. is one of multiple financial institutions eligible to offer investments under the Program. InvestEd Portfolios are managed by Ivy Investment Management Company and are distributed by Waddell & Reed, Inc. Ivy Funds mutual funds are managed by Ivy Investment Management Company and are distributed by Ivy Distributors, Inc., an affiliate of Waddell & Reed, Inc.
Is there a minimum amount I must invest to open an Ivy InvestEd 529 Plan account?
To open an Ivy InvestEd 529 Plan account, the minimum initial investment is $250 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.
How do I make a withdrawal from my Ivy InvestEd 529 Plan account?
An account owner may withdraw money from an Ivy 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, computers and other-related equipment such as Internet and computer software required for the enrollment or attendance of a 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 InvestEd 529 Plan account, you must complete an Ivy InvestEd 529 Plan Withdrawal Form.
- 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.
- 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.
- 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.
- 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.
Interested in opening an Ivy InvestEd 529 Plan account?
Investing is about making wise decisions. It begins with selecting a qualified financial advisor who will partner with you to identify investments targeted to your needs. The Ivy InvestEd 529 Plan offers a range of investment options designed to meet differing time horizons and risk tolerances. Talk to your advisor today about setting up an Ivy InvestEd 529 Plan account and start investing now for higher education expenses later.
Already an Ivy InvestEd 529 Plan account owner or need additional information?
If you have questions, comments or concerns about your Ivy InvestEd 529 Plan account, please contact our client services department.
Toll-free Phone & Fax
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,
Mon. - Fri.
InvestEd Client Services
Post Office Box 29217
Shawnee Mission, KS 66201-9217
InvestEd Client Services
6300 Lamar Avenue
Overland Park, KS 66202-4247
Before investing, investors should consider the investment objectives, risks, charges and expenses associated with the Ivy InvestEd Plan carefully before investing. This and other information is found in the InvestEd Portfolios prospectus, and the Ivy Funds prospectus, the Ivy InvestEd 529 Plan Program Overview, and the 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.
Non-residents or tax-payers of states other than Arizona should consider participating in the 529 plan(s) available in their state of residence as such plan(s) may offer more favorable state income tax or other benefits than those offered under the Ivy InvestEd 529 Plan. Please consult your tax advisor regarding your personal tax situation.
The Ivy InvestEd 529 Plan and shares of InvestEd Portfolios are offered by Waddell & Reed, Inc. as part of the Arizona Family College Savings Program Trust Fund, a 529 plan administered by the Arizona Commission for Postsecondary Education (the “Program”). Waddell & Reed, Inc. is one of multiple financial Institutions eligible to offer Investments under the Program. Accounts a not insured by the State of Arizona, the Trust, the Arizona Commission for Postsecondary Education, or any other governmental entity, Waddell & Reed, Inc., Ivy Distributors, Inc., or any affiliated or related party, and neither the principal deposited nor the Investment return is guaranteed by any of the referenced parties.
Past performance is not a guarantee of future results. Investments into a 529 plan, including the Ivy InvestEd 529 Plan, are not guaranteed, and all investments involve a certain degree of risk. The value of your Ivy InvestEd 529 Plan account will depend upon the performance of the portfolios in which your account is invested and will fluctuate. It is possible that the value of your account may be less than the amount you invested.
The information provided may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to assist in the understanding the issues discussed. Neither Waddell & Reed, Inc. nor Ivy Distributors, Inc., nor their associates offer tax, legal, or accounting advice. You may want to consult with your accountant or tax advisor to discuss your personal situation. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance.