Using Your Money
The money in your account can be used to pay for qualified higher-education expenses at any eligible college, university, vocational school, or other post-secondary institution in the country (as well as some outside the U.S.). Search for all eligible schools.
Eligible expenses include tuition, fees, supplies, books, and required equipment. In addition, certain room and board costs are included. You can make a contribution and use it for qualified college expenses in the same year. The beneficiary must be enrolled at least half-time in order for room and board expenses to qualify, and there are limits on the total room and board costs per academic year. More information about eligible expenses is available in IRS Publication 970, Tax Benefits for Education. Qualified expenses also include the purchase of computer technology, equipment, or Internet access and related services paid for or incurred in 2009 or 2010, if such technology, equipment, or services are to be used by the beneficiary and their family during any of the years the beneficiary is enrolled at an Eligible Educational Institution.
If the beneficiary does not use the money,
- the account can be re-designated to another beneficiary who is a member of the family,
- the funds can remain in the account until the beneficiary returns to school, or
- you can close the account and receive the balance at any time. There is a 10% additional federal tax for withdrawing funds this way, and federal and state income taxes must be paid. The penalty is waived if the distribution is due to the death or disability of the beneficiary or if a scholarship or nontaxable grant is awarded to the beneficiary.
Limitations on Room and Board
Beneficiaries must be enrolled at least half-time at a post-secondary institution for room and board expenses to be considered an eligible education expense. If the beneficiary lives in housing operated by the educational institution, the cost cannot exceed what is normally assessed for most students. The limit for room and board is based on a stated "cost of attendance" provided by each institution. This allows for more realistic distributions in areas where the cost of living is higher.
Taxing Withdrawals
If the funds are used for qualified college expenses, your withdrawal is tax-free. Wisconsin residents will owe no state income tax on qualified withdrawals. If you reside in another state, consult your tax advisor for state tax information.
Non-educational Withdrawals
The account owner may withdraw money for non-qualified purposes, but the earnings portion of this money will be subject to federal and state taxes plus a 10% additional federal tax.
Scholarships and Grants
If the designated beneficiary receives a qualified scholarship (including nontaxable grants), funds from the account, up to the amount of the scholarship, may be returned to the account owner without penalty. The account owner must retain proof of receipt of the scholarship for their tax records but does not need to submit proof in order to receive a refund from their EdVest account.
Request a Distribution
To request a distribution, the account owner needs to complete an EdVest Distribution Request form (PDF). If the account owner selected the Redemption Option at account opening, then he or she can call 1-888-338-3789 to request a distribution or log in to Online Account Access. (Distributions done online will be sent by check to the address of record.) An account owner may add the Redemption Option feature at any time by completing the EdVest Account Change Request form (PDF).
Financial Aid
Your eligibility for financial aid will depend on your family's financial circumstances when your child enrolls in college.
- Federal Aid
An account established by the account owner for a beneficiary is considered an asset of the account owner for financial aid purposes. For determining Federal financial aid eligibility, approximately 6% of a parent's assets and 20%1 of a student's assets are considered. Even so, families that have invested for college are generally in a better position than those who have not. For example, a student from a family that has invested for college may not have to borrow as much in student loans, which can be the biggest part of most financial aid packages.
529 accounts owned by a dependent student, which includes UGMA/UTMA 529 accounts, will be considered an asset of the parent for financial aid calculations starting with the 2009-2010 school year. This is the same treatment as parent-owned 529s. Currently, these accounts are excluded from financial aid consideration. 529 accounts owned by an independent student are considered an asset of the student for financial aid calculations. If the account owner is not a student, parent, or legal guardian, then the account assets should have no implications to financial aid.
- Wisconsin State Aid
EdVest investments are exempt from the calculation of Wisconsin state financial aid awards administered by the Higher Educational Aids Board (HEAB). If you're applying for Wisconsin State financial aid, contact HEAB to have your EdVest assets removed from the calculation of your "expected family contribution." Contact HEAB by writing to: P.O. Box 7885, Madison, WI 53707-7885 (give them the question number from the FAFSA form, and the amount of EdVest assets included), or e-mail them at HEABmail@heab.state.wi.us.