Account
An account in the Plan.
Account Application
The account application is the application to be completed and submitted to the Path2College 529 Plan, along with payment to open an account and to participate in the Plan. It incorporates by reference the Plan Participation Agreement.
Account Owner
The account owner is the owner of an account in the Plan, typically the parent or grandparent but it doesn’t need to be a family relation.
Active Management
An investment approach that seeks to exceed the average returns of the financial markets. Active managers rely on research, market forecasts, and their own judgment and experience in selecting securities to buy and sell.
Additional Tax
A 10% additional federal tax imposed on the earnings portion of a Non-Qualified Withdrawal.
Asset Allocation
The distribution of funds within an investment portfolio among various investment alternatives or asset classes. Typically, asset allocation is expressed in percentages; for example, 40% equities, 40% fixed income, 20% cash.
Asset Classes
Different types of investments. Equities (stocks), fixed-income (bonds) and money market (short-term investments) are examples of asset classes.
Balanced Fund
A fund that seeks both growth and income, with stability of principal, through a portfolio that includes both stocks and bonds.
Beneficiary
The person named by the account owner in the account application. This is the future student who will be using the funds.
Bond
A bond is a type of debt security in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. A collection or grouping of financial bonds is known as a bond portfolio.
Capitalization
The market value of a company’s outstanding securities, excluding current liabilities. Under $3 billion is generally considered small-cap; $2 - $10 billion is mid-cap; and over $8 billion is large-cap.
Coverdell Education Savings Account (CESA or ESA)
A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the designated beneficiary of the account. It may be used to save for K-12 and higher education expenses and limits contributions to $2,000 per year per child. Household income limitations may apply.
Custodial Account
An account that is created for the benefit of a minor, with an adult (agent, bank, trust company, or other organization) as the custodian in accordance with applicable state law. With custodial accounts, control of the account transfers to the beneficiary at the age of majority (18 or 21 depending on the state).
Custodian
An agent, bank, trust company, or other organization which holds and safeguards an individual’s account assets for them.
There are no glossary terms that begin with the letter "D"
Education IRA
See Coverdell Education Savings Account (CESA or ESA).
EGTRRA
EGTRRA is the Economic Growth and Tax Relief Reconciliation Act of 2001, as amended, and the Treasury regulations, pronouncements and publications thereunder.
Eligible Educational Institutions
An eligible educational institution is any college, university, vocational or technical school deemed eligible to participant in federal student aid programs. This includes thousands of schools in the U.S. and some aboard. Use the Federal School Code Search on the FAFSA Web site (www.fafsa.ed.gov) to search for a complete list of eligible colleges, universities, and vocational schools
Entity Account Application
This is the account application used by trusts or estates, business entities, Internal Revenue Code Section 501(c)(3) organizations, or state/local governments. Download the Entity Account application.
Equities
Also called stocks. A security representing ownership rights in a company. A stockholder is entitled to share in the company’s profits, some of which may be paid out as dividends. A collection or grouping of financial equities is known as an equity portfolio.
Expense Ratio
Also called the Total Annual Asset-Based Fee. In the Edvest College Savings Plan, it includes the underlying mutual fund expenses, a Board Adminstrative fee, and the plan manager fee.
Family Member
A ‘member of the family’ of a beneficiary is a person related to that beneficiary as follows: (i) a son or daughter, or a descendant of either; (ii) a stepson or stepdaughter; (iii) a brother, sister, stepbrother or stepsister; (iv) the father or mother, or an ancestor of either; (v) a stepfather or stepmother; (vi) a son or daughter of a brother or sister; (vii) a brother or sister of the father or mother; (viii) a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; (ix) the spouse of the beneficiary or of any of the other foregoing individuals; or (x) a first cousin of the beneficiary. For this purpose, a child includes a legally adopted child and a brother or sister includes a half-brother or half-sister.
Fixed-income Securities
Also called bonds. Essentially, these are loans that you make to a government or corporation (called the issuer) when it needs to raise the cash. They have a maturity date, which is the date the issuer is obligated to repay you the principal, or face amount, of the bond. Bonds also generally pay you interest until their maturity date. A collection or grouping of financial bonds is known as a bond portfolio.
Growth Fund
A mutual fund that generally invests in stocks of companies believed to have above-average potential for growth in revenue and earnings. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value.
High Yield Bond
A bond that has a rating of BB or lower and that pays a higher yield to compensate for its greater risk. Also known as junk bonds.
Index Fund
A passively-managed mutual fund that seeks to match the performance of a particular market index.
Inflation-indexed Securities
Bonds issued by the U.S. government, government agencies, or corporations, whose principal and interest payments-unlike those of conventional bonds-are adjusted over time to reflect inflation.
International Stock Fund
A mutual fund that invests in the stock of companies located outside of the United States.
Investment Portfolios
The Plan investment options in which you may invest your contributions.
IRA
Individual Retirement Account — A tax-deferred or tax-free retirement account established by an individual that permits the individual to set aside up to a certain amount per year, with earnings tax-deferred until withdrawals begin at age 59 1/2 or later, or in the case of a Roth IRA, are tax-free on withdrawal. See a tax advisor for more detailed information.
IRS
The Internal Revenue Service is the nation’s tax collection agency and administers the Internal Revenue Code enacted by Congress.
There are no glossary terms that begin with the letter "J"
Kiddie Tax
A special tax law for children under 17 years old who have earned income that is in excess of an annually determined threshold. Extra income beyond this threshold becomes taxable at the guardian’s rate.
There are no glossary terms that begin with the letter "L"
Medallion Signature Guarantee
Available from many domestic banks, trust companies, credit unions, and other financial institutions, this is a special signature guarantee that ensures the authenticity of a signature for the transfer of a security.
Money Market Fund
A mutual fund designed to provide safety of principal and current income by investing in securities that mature in one year or less, such as bank certificates of deposit, commercial paper and U.S. Treasury bills. Money market funds seek to maintain a stable $1 net asset value. Money market funds have the lowest risk of any type of mutual fund, but may offer the lowest potential for gains.
Mutual Fund
A diversified, professionally managed portfolio of securities that pools the assets of individuals and organizations to invest toward a common objective such as current income or long-term growth.
Net Asset Value (NAV)
Also known as share price. The market value of a mutual fund’s total assets, minus liabilities, divided by outstanding shares.
There are no glossary terms that begin with the letter "O"
Passive Management
A low-cost investment strategy in which a mutual fund attempts to match — rather than outperform — a particular stock or bond market index; also known as indexing.
Plan Manager
The plan manager for the Path2College 529 College Savings Plan is TIAA-CREF Tuition Financing, Inc. (TFI).
Portfolio
A collection of financial investments such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed-fund counterparts held by an investment company, hedge fund, or individual.
Qualified Higher Education Expenses
Qualified higher education expenses include tuition, certain room and board expenses, fees, and the cost of books, supplies, and equipment required for the enrollment and attendance of the Beneficiary at an eligible educational institution. Computers and related technology such as internet access fees, software or printers are also qualified when used primarily by the beneficiary when enrolled at an eligible educational institution.
Additional expenses include certain enrollment and attendance costs of a special needs beneficiary at an eligible institution. For more information about qualified withdrawals, click here. At the federal level and in some states, qualified education expenses also include tuition in connection with enrollment or attendance at a K-12 public, private or religious school, up to a maximum of $10,000 per year per Beneficiary from all Section 529 plans. State tax treatment of withdrawals for K-12 tuition expense is determined by the state where you file state income tax.
Qualified Withdrawal
Any withdrawal from an Account used to pay for the Qualified Higher Education Expenses of the Beneficiary at an Eligible Educational Institution.
Qualified Higher Education Expenses include tuition in connection with enrollment or attendance at a K-12 public, private or religious school, up to a maximum of $10,000 per year per Beneficiary from all Section 529 plans; expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act; and up to $10,000 repaid (including principal and interest) on any qualified education loan of either a 529 plan designated beneficiary or a sibling of the designated beneficiary. To be a qualified expense, the loan repayment amount for an individual is subject to a lifetime limit of $10,000. State tax treatment of withdrawals for these expenses is determined by the state where you file state income tax. If you are not a Georgia taxpayer, please consult with a tax advisor.
Rollover
A tax-free transfer of funds from one qualified 529 plan to another within a specific time frame, usually 60 days. You are permitted to transfer funds from another 529 college savings plan to an account in the Path2College 529 College Savings Plan for the same beneficiary once within a 12-month period without incurring federal income tax. The 529 college savings plan from which you are transferring funds may be subject to differences in features, costs and surrender charges.
Non-Qualified Withdrawals and an outgoing rollover from Path2College 529 College Savings Plan to another state’s 529 plan are subject to Georgia income tax if the contribution portion was previously deducted for Georgia income tax purposes.
You should consult with your tax advisor or the other 529 college savings plan. State and local taxes may apply.
Section 529
Section 529 of the Internal Revenue Service Code, the section that specifies the requirements for qualified tuition college savings programs (529 plans).
Securities
The general name used to describe stocks, government obligations, corporate bonds, or ownership rights, such as options or futures.
Successor Account Owner
The Successor Account Owner is the person designated by the account owner on the account application to succeed to ownership of the account upon the account owner’s death.
Systematic Exchange
An optional feature offered by Edvest that allows account owners to automatically transfer funds from one or more investment options to one or more different investment options through regularly scheduled transfers. For more details, see Setting Up Systematic Exchange.
Taxable Withdrawal
Any withdrawal from an Account that is: (1) paid to a beneficiary of, or the estate of, the Beneficiary on or after the Beneficiary’s death or attributable to the permanent disability of the Beneficiary; (2) made on account of the receipt by the Beneficiary of a scholarship award or veterans' or other nontaxable educational assistance (other than gifts or inheritances), but only to the extent of such scholarship or assistance; (3) made on account of the Beneficiary’s attendance at a military academy, but only to the extent of the costs of education attributable to such attendance; or (4) equal to the amount of the Beneficiary’s relevant Qualified Higher Education Expenses that is taken into account in determining the Beneficiary’s Hope Scholarship/American Opportunity Credit or Lifetime Learning Credit.
TIAA-CREF Tuition Financing, Inc.
TIAA-CREF Tuition Financing, Inc., (TFI) is an affiliate of TIAA, a financial services organization with more than 100 years of investment experience.
Total Return
A percentage change, over a specified time period, in a mutual fund’s net asset value, adjusted to reflect the reinvestment of all dividend and capital gain distributions.
Traditional (Classic) IRA
See IRA.
UGMA
Uniform Gift to Minors Act. Laws adopted by most states allowing an adult to contribute to a custodial account in a minor’s name without having to establish a trust or name a legal guardian. Thus, minors can have securities bought and money invested in their names, but the custodian is responsible for managing the funds in the account. The custodian has a fiduciary duty to manage the account prudently, but once the minor reaches the age of majority, he/she has complete rights to the funds in the account. The assets are the legal property of the minor, and the parent has no legal control over the uses of the proceeds of the account. All withdrawals from the account are taxed at the minor’s rate. Putting money into a UGMA account can negatively impact the chances for financial aid, since financial aid officers may weigh children’s assets more heavily than parents’ assets.
Unit
An ownership interest in an Investment Portfolio that is purchased by making a contribution to an Account.
UTMA
Uniform Transfers to Minors Act. Law which extends the Uniform Gift to Minors Act’s definition of a gift to include real estate, fine art, patents and royalties.
There are no glossary terms that begin with the letter "V"
Withdrawals
Types of Withdrawals:
- Qualified Withdrawals
These are untaxed and include any withdrawals that will be used to cover Qualified Higher Education Expenses for the student at an Eligible Educational Institution. The student must be enrolled for at least half-time for room and board expenses to be considered qualified expenses.
Qualified Higher Education Expenses also include tuition in connection with enrollment or attendance at a K-12 public, private or religious school, up to a maximum of $10,000 per year per Beneficiary from all Section 529 plans; expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act; and up to $10,000 repaid (including principal and interest) on any qualified education loan of either a 529 plan designated beneficiary or a sibling of the designated beneficiary. To be a qualified expense, the loan repayment amount for an individual is subject to a lifetime limit of $10,000.* - Taxable Withdrawals
The earnings portion of this type of withdrawal is subject to federal and state tax but does not include the additional federal 10% tax. Say your child receives a full or partial scholarship or attends a military academy, you can withdraw certain amounts from your 529 account that will not be used for qualified higher education expenses and those amounts will be subject to tax on the earnings portion of the withdrawal, but will not be subject to the additional federal 10% tax. - Non-Qualified Withdrawals
The earnings portion of this type of withdrawal will be subject to tax, including the additional 10% federal tax. Examples might include using the money for a car, vacation or home improvement. But even if you urgently need to pay a medical bill and withdraw money from your 529 plan as a last resort — that withdrawal would still be subject to tax, including the additional 10% federal tax. Additionally, Non-Qualified Withdrawals and an outgoing rollover from Path2College 529 College Savings Plan to another state’s 529 plan are subject to Georgia income tax if the contribution portion was previously deducted for Georgia income tax purposes.
In the event of a refund of amounts paid for qualified higher education expenses from an eligible educational institution, the refund may be redeposited to the 529 plan within 60 days without the amount being subject to tax. The recontributed amount cannot exceed the amount of the refund.
*State tax treatment of withdrawals for K-12 tuition expense, apprenticeship program expenses, and the repayment of student loans is determined by the state where you file state income tax. If you are not a Georgia taxpayer, please consult with a tax advisor.
There are no glossary terms that begin with the letter "X"
There are no glossary terms that begin with the letter "Y"
There are no glossary terms that begin with the letter "Z"
1099Q
An IRS form an individual receives if withdrawals were made from a 529 or Coverdell Education Savings Account (ESA) during the previous tax year. The form is used by the individual to fill out both federal and state tax returns.
Click here to see who would receive a 1099Q form.
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