All about 529 plans

What's a 529 plan, and how is it different from a savings account?
The Federal Government established regulations that enable families to save and invest for their children's college expenses on a tax-free basis. These provisions of the Federal tax law are known as the "529 Plan" and resulted in most states adopting similar provisions of state tax laws to expand the benefits of the program to include state tax advantages. Here's how it works: you open a 529 account with a licensed broker. You contribute to the account. The earnings accumulate interest free of federal income taxes when you withdraw the money to pay for qualified college expenses.

What if my child decides not to go to college?
You have three basic options:

  1. Change beneficiaries - you can change beneficiaries as often as you like, provided the new beneficiary is a member of the family as defined by the IRS. You can even name yourself as beneficiary, and continue your own education.
  2. just in case your child changes her mind down the road.
  3. The earnings portion of any withdrawal not used for qualified higher education expenses is taxed at your normal tax rate plus 10%.

How will my funds be invested?
Your Putnam College Advantage 529 account gives you the freedom to invest your funds with a variety of options:  equity funds (stocks), fixed income funds (bonds), and money market cash accounts. You choose the investment that's right for you

Can I make deposits in addition to my CareSponsors earnings?
Yes. You can invest a lump sum at any time. In addition, you can make automatic periodic transfers from a savings account, or you can even have payroll deduction if your employer will allow that. There is no annual limit to the amount you can deposit, but some limits may apply when your account value reaches $245,000.

Starting a CareSponsors program at your company

Does it cost anything to open an account?
No. There is no cost, and no obligation to buy anything. Just complete your enrollment application, and CareSponsors will open an account for your organization and mail you a confirmation letter. There is also no cost for your employees to open an account either.

How long does it take to get set up as a CareSponsors customer?
You can obtain an enrollment application by phoning CareSponsors at 1-866-344-5454, or by downloading an enrollment form from this site. Fill out the enrollment form completely, provide all requested information, and mail the form to CareSponsors. Your enrollment application will be processed within 48 hours of receipt, and CareSponsors will mail you a confirmation letter indicating your account is open and ready for business!

I have a securities broker that I already work with. Can I have that broker make deposits into my account?
No. There are many competent brokers. However, CareSponsors' financial partners have been carefully chosen to meet stringent standards for secure online transactions, and they have agreed to provide CareSponsors families with fee-free transfers and minimum deposits ($15).

Family enrollment and purchase questions

Does it cost anything for a family to enroll and purchase certificates?
No. There is no cost, and no obligation to buy anything. You pay your sponsoring organization face value for the certificates and prepaid cards you order.

What about privacy?  I don't want to share my personal information.
CareSponsors asks for minimal personal information from our families. This includes contact information and a social security number. We only ask for the minimum needed information to forward your earnings to Putnam investments. CareSponsors does not, in conducting its business, sell information about its customers. You can read our complete privacy policy here. In addition, after your initial enrollment all of your CareSponsors transactions with Putnam will be controlled and referenced with a unique control number that we assign to your account.

Can I pay for my purchases with a credit card?
Sorry, no. Purchases are paid for by personal checks made out to your employer, or by using our on-line Presto-Pay secure payment system. Credit card transactions involve fees that reduce earnings from CareSponsors purchases. In the interest of maximizing earnings for our families, the CareSponsors program does not allow credit card transactions.

Shopping with CareSponsors certificates and gift cards

Where do the cards and certificates come from?
Directly from the retailers. The certificates and gift cards we provide to our customers are the same you would buy if you went to the participating retailer and purchased them yourself. You can see a complete list of retailers by clicking here

Can I use the gift cards and certificates anywhere?
Yes, the certificates are accepted at all participating retailer locations.

Is there a minimum amount of certificates that I have to order?
CareSponsors has no minimum order amount. However, there is a modest shipping charge which applies to each company order, so it may be impractical for a company to order just one or two certificates or gift cards.

Do I have to order every week? How often can I order?
There are no requirements for ordering. You can order as frequently or infrequently as you wish. Most CareSponsors customers schedule their orders once a week, minimum. Of course, the more frequently you order, the more you save for future education.  

When will I get my order?
Families who place orders with CareSponsors will have their purchases delivered according to the schedule set by their employer.

Can I use CareSponsor gift cards to pay department store charge account balances?
A few retailers allow you to pay charge account balances with certificates or gift cards, but generally speaking, most do not. CareSponsors customers can search our online participating retailers list for specific information on which retailers do and do not accept gift cards or gift certificates for payment on charge account balances.

Does CareSponsors ever run out of certificates? What happens then?
Occasionally, CareSponsors may temporarily run out of a particular certificate. When that happens, we will place the item on backorder and ship it with your next order. If you do not place your next order within 10 business days, CareSponsors will ship your backorder at that time. Unusually large or urgent backorders may be shipped earlier at our discretion.

What if I don't want to give CareSponsors authority to electronically debit my company account. Can I pay by check?
No.  CareSponsors' automated systems require automatic payment. 

When will I get my order?
If your order is received by 1:00pm Eastern time, CareSponsors guarantees your order will leave our offices no later than the next following business day. In addition, delivery time will vary depending on which delivery service level you choose.

Saving for college with CareSponsors

How will I know how much I've earned?
Families can check their account history online at www.caresponsors.com. You'll see the order date, the face value of the order, and 529 Plan contribution earned. You can also see whether or not that contribution has been transferred to your Putnam 529 account.

How often do you transfer funds to Putnam on my behalf?
Once each month, sixty days in arrears. So the earnings from purchases made from January 1 to January 31 would be transferred to your Putnam 529 account on or about April 1. The minimum allowable deposit into a Putnam College Advantage account is $15. If your monthly earnings totals less than $15, CareSponsors will hold your earnings and until the next month when your total non-transferred earnings reach $15.

What if I decide to quit the CareSponsors program?
Any money you've earned in excess of $15 will be transferred to your Putnam account. Amounts less than $15 earned become the property of your company defined non-profit beneficiary after 12 months of inactivity. All earned funds that have already been transferred to your Putnam account remain there and are controlled by you and you alone.

How will my earnings be invested?  
The Putnam 529 account is self-directed. You can choose from many popular investment options at Putnam's College Advantage web site.

I already have a broker.  Can I give my earnings to my broker instead of Putnam?
You're always free to pursue any investment opportunity you like with any broker or investment counselor. However, CareSponsors has carefully chosen a brokerage network that is capable of handling many small transactions and deposits in an efficient manner, and all CareSponsors 529 Plan contributions must go through them.