Obtaining a Refund from Your Account

Need a Refund?

You can receive a refund for the following reasons:

  • If the Beneficiary chooses not to attend college or receives a scholarship.
  • In the event of the Beneficiary’s death or disability.
  • If the contract is terminated due to misrepresentation regarding residency or age.
  • Failure to provide required information or default in payment.
  • If you don’t want or need the contract any longer.

The earnings portion of a Refund, if any, is subject to the actuarial soundness of the Plan and is subject to federal income taxes plus a 10% federal tax as well as any state or local taxes that may apply. Refund Value does not include any state-provided or procured matching contributions or earnings thereon. See page 20 of the Plan Description for more information on the taxation of refunds.

Refunds may also be given to accounts where the Purchaser ends up with excess units after the Beneficiary graduates, and the Purchaser chooses not to transfer the units to a newly qualified Beneficiary or to another 529 Plan.

The contract will automatically terminate 10 years after the Beneficiary’s projected high school graduation date.

The Refund Process

You can cancel or terminate a contract at any time and for any reason and receive a refund.

The value of the refund, however, depends upon a number of factors, including the timing of the refund and the reason for cancellation. The earnings portion of a Refund, if any, is subject to the actuarial soundness of the Plan and is subject to federal income taxes plus a 10% federal tax as well as any state or local taxes that may apply. Refund Value does not include any state-provided or procured matching contributions or earnings theron.

Please refer to the Plan Description for more information.

All requests for cancellation must be made in writing in a format approved by the Plan.

The Three-Year Holding Period Requirement and the Value of Your Refund

The value of the refund, however, depends upon a number of factors, including the timing of the refund and the reason for cancellation:

  • For all units held at least three years (and for contracts cancelled due to the Beneficiary’s death, disability, receipt of scholarship or admission to a U.S. Military Academy), the Purchaser will receive the Refund Value, which is an amount equal to the price paid for the unit plus or minus adjusted net investment earnings or losses on that amount, with the earnings rate set annually by the Board at a rate that is up to 2% less than the actual net earnings, is capped at 5%, and is net of any fees due and payable. The earnings portion of a Refund, if any, is subject to the actuarial soundness of the Plan and is subject to federal income taxes plus a 10% federal tax as well as any state or local taxes that may apply. Refund Value does not include any state-provided or procured matching contributions or earnings thereon.
  • For units that do not meet the three-year holding period requirement, the Purchaser will receive the Reduced Refund Value. It will be limited to the lesser of (1) the price paid for the unit, or (2) the price paid for the unit, plus or minus net investment earnings or losses on that amount, and is net of any fees due and payable. This means the Reduced Refund Value will not include any net positive earnings, but can be less than the purchase price if there have been periods of negative returns in the market. Reduced Refund Value does not include any state-provided or procured matching contributions or earnings thereon.