You don’t have to be the parent or even related to the student. Parents, grandparents and even family friends can open an account, no matter the income or age of the student. You also can open an account to invest for your own future higher education expenses.

Account owners must reside in the United States and be 18 or older, with a valid Social Security number (without work restrictions) or U.S. taxpayer identification number. Noncitizens need to document their United States residency by providing a copy of their United States Permanent Resident Card (commonly known as a “Green Card”) and passport.

The account owner, also called the participant, is the person who opens and retains control of the account. NextGen 529 accounts can only be owned by one person. The account owner is often a parent, but accounts can also be owned by grandparents, other family members, and even family friends. An adult can also own an account for themselves. The account owner controls the account, opens the account in their name and address, and receives all communications associated with the account to help them decide how the money is invested and for what the money is withdrawn.

The designated beneficiary is the person benefiting from the NextGen 529 account. The beneficiary is often a child, but it can also be an adult student saving for a return to school or further training. (In this case, the account owner and the beneficiary can be the same person.)

If the account owner wishes to share a duplicate account statement with another person, they can request a duplicate by contacting the account servicer.

No. As the account owner of an individual NextGen 529 account, you retain control of the account. Only you can instruct how and when withdrawals are made from the account.

Yes.  Currently, you are permitted one rollover per 12-month period from a Coverdell ESA or other Section 529 plan for the same designated beneficiary.

Maine offers a $1,000 Maine income tax deduction on contributions made to NextGen 529 (and any other 529 plan). Tax filers can claim this deduction if their federal adjusted gross income is $100,000 or less if filing single or married filing separately, or $200,000 or less if filing as head of household or married filing jointly. Go to Maine State Tax Deduction to learn more.

Maine residents can receive grant money when they open a NextGen 529 account, make contributions, and set up automated funding. In addition, all babies born Maine residents receive the $500 Alfond Grant for higher education expenses. To learn the specifics about each grant, go to Grants for Maine Residents.

If either the NextGen 529 account owner or the account beneficiary is a Maine resident, an amount approximately equal to any Maine Administration Fee paid during the year will be automatically rebated to eligible accounts in the following year. To qualify, on the last business day of the calendar year the account must have a balance of at least $1,000 and must be invested in a Portfolio subject to the Maine Administration Fee. The minimum rebated amount is $2.00; amounts less than $2.00 will not be paid.

Tax-free growth

Any earnings can grow free from federal and Maine state income tax. Withdrawals, including any earnings, are tax-free when withdrawn to pay for qualified higher education expenses.¹ These tax benefits can help maximize your contributions to your 529 account.

Maine state tax deduction

Maine offers a $1,000 Maine income tax deduction on contributions made to NextGen 529 (and any other 529 plan). Tax filers can claim this deduction if their federal adjusted gross income is $100,000 or less if filing single or married filing separately, or $200,000 or less if filing as head of household or married filing jointly.

Other states offer tax deductions. Learn more at finaid.org:

Gift tax benefits

529 plans also offer federal estate and gift tax benefits, making them a valuable estate-planning tool. 

A contribution to a 529 plan account is treated as a completed gift from the giver to the recipient (the designated beneficiary of the 529 account) and qualifies for the annual federal gift tax exclusion of $18,000 ($36,000 for married couples filing jointly), per beneficiary. This allows you to remove assets from your taxable estate while contributing to an account that you control, if you are the account owner. 

You may also be able to take advantage of a federal gift tax election that applies only to 529 plan contributions. This allows you to make a lump-sum contribution of up to $90,000 ($180,000 for married couples filing jointly), which is five times the annual exclusion amount, per beneficiary in one year, and treats the contribution as if it was made ratably over five years.³

Contributions can be made online, by check, or by transferring or rolling over funds from another account. You can make it easy by setting up automatic contributions from your checking or savings account, or using payroll deduction. 

Learn more about making contributions to your Connect Account

Learn more about making contributions to your Direct Account

Your financial advisor can help you with contributions to your Select Account.

Yes. Currently you can contribute to both a Section 529 account and a Coverdell ESA in the same year for the same beneficiary. If you are using the gift tax exclusion, the limit applies to contributions to both types of accounts.

There is no minimum contribution amount after you open your account with $25. Make contributions when you can, in whatever amount you are able. 

Also, if your child received the $500 Alfond Grant, no initial contribution is necessary.

NextGen 529’s maximum contribution limit is generous – $545,000 across all 529 accounts for the same beneficiary.

NextGen 529 is offered through three series—check out the options available for Connect, Direct, and Select Accounts! 

Connect Accounts

A Connect Account offers a Year of Enrollment investment option. When you open your Connect Account you will be asked to enter the age your beneficiary will start using their funds. Based on the expected age entered, you will be presented with the Year of Enrollment Portfolio that best corresponds to the year in which you expect the beneficiary to start using their funds. After your account is opened, you can change your investment option to another portfolio or to the NextGen Savings Portfolio—a stable principal option, eligible for FDIC insurance. Learn more about Connect Account investment options.

Direct Accounts

When you open a NextGen 529 Direct Account, you’ll be able to choose from 33 investment options, including two suites of Year of Enrollment Portfolios, Diversified Portfolios, Single Fund Portfolios, and two stable principal portfolios. With a Direct Account you can build a college savings plan that works to suit your family’s savings goals. Learn more about Direct Account investment options.

Select Accounts

Select Accounts are for people who work with a financial advisor.  There are 80 investment options, including 78 investment options managed by one of BlackRock, Franklin Templeton, Lord Abbett, NYLI, MFS or Neuberger Berman, as well as the Principal Plus Portfolio and the NextGen Savings Portfolio. These investments are sold through financial advisors. Learn more about Select Account investment options.

There are a number of ways to make a withdrawal–you can request a check, transfer funds to your bank account, or even send funds directly to a school. Your financial advisor can help you with a withdrawal from your Select Account. 

Learn more about making withdrawals from your Direct Account

Learn more about making withdrawals from your Connect Account

A family’s income (not savings or assets) is the primary factor in determining federal financial aid eligibility. The federal financial aid eligibility formula includes an Education Savings and Asset Protection Allowance that excludes a portion of the assets that are counted (primary residence and retirement accounts are already excluded). Only “countable” assets (including 529 plan assets) that exceed the allowance have ANY impact – and currently not more than 5.64%.⁴ For some families, college savings won’t reduce financial aid at all.

Any savings that a student uses to pay for college are helpful because they can reduce reliance on loans, which must be repaid with interest.

Yes. But, because securities cannot be contributed to a 529 account, you must first liquidate any securities in the UGMA/UTMA account in order to invest the cash into your NextGen 529 account. You’ll need to open a custodial NextGen 529 account to receive UGMA/UTMA funds.

In addition, you will have to report any gains/losses incurred from liquidating the custodial accounts on your personal tax return. You should discuss any financial transactions with your professional tax advisor. 

The good news is that, once the custodial assets are deposited into a NextGen 529 account, you have the opportunity to benefit from the advantages of NextGen 529 and eliminate any need to file an annual tax return for the UGMA/UTMA assets held in the NextGen 529 account.

Yes. Effective December 22, 2017, you may roll over amounts in a 529 plan account to a Section 529A Qualified ABLE Program (ABLE) account for the same designated beneficiary, or a qualified family member of the beneficiary, federal income tax free, subject to applicable ABLE contribution limits. Distributions in connection with ABLE rollovers must occur before January 1, 2026. Tax treatment of ABLE rollovers may differ in some states. Please consult your tax advisor for specific advice regarding such distributions.

Please note that Maine’s ABLE program, ABLE ME, can only accept rollovers without earnings from another State’s 529A Qualified ABLE Program or 529 Qualified Tuition Program. For more information, visit ABLE Maine | Office of the Maine State Treasurer.