Get to know Bright Start 529 college savings plan
How Our 529 Plan Works
No matter your child’s age, the best time to open a Bright Start 529 account is today. Because the sooner you start, the more you can take advantage of compound earnings and unique tax benefits.
Start early to make the most of your savings
Saving early has the potential to deliver compounding earnings over a longer period of time.
529 fact
Help grow your savings with gifts from friends and family using Ugift®.
Advantages of starting early
See how your savings might grow if you start with $5,000 and continue to save $100 a month for eight, 12 and 18 years.
- Earnings
- Subsequent Contributions
- Initial Contribution
Save for 8 years
- Earnings: 6% Annual Return
- Subsequent Contributions: $100 per month
- Initial Contribution: $5,000 Lump Sum
- Total savings growth over time: $20,559
Save for 12 years
- Earnings: 6% Annual Return
- Subsequent Contributions: $100 per month
- Initial Contribution: $5,000 Lump Sum
- Total savings growth over time: $31,520
Save for 18 years
- Earnings: 6% Annual Return
- Subsequent Contributions: $100 per month
- Initial Contribution: $5,000 Lump Sum
- Total savings growth over time: $53,584
Graph Footnotes
- This chart assumes a $5,000 lump sum investment, a $100 monthly investment and 6% annual rate of return. The calculations are for illustrative purposes only, and the results are not indicative of the performance of any investments. The calculations do not reflect any plan fees or charges that may apply. If such fees or charges were taken into account, returns would have been lower. With any long-term investment, investment return may vary. Such automatic investment plans do not assure a profit or protect against losses in declining markets. Account value in the investment options is not guaranteed and will fluctuate with market conditions.
How much should you save toward your child’s tuition?
Get a quick estimate of approximately how much you’ll need to save using our calculator tool.
Estimate your savings
Unique tax benefits
When you pay fewer taxes, you can potentially save more and grow your account faster—giving your child or grandchild an even bigger head start. Bright Start 529 offers compelling income tax benefits.
- Illinois taxpayers can reduce their state taxable income up to $20,000 if married filing jointly ($10,000 filing single) for contributions made into Bright Start 529. If the funds aren't used for qualified higher education expenses, a federal 10% penalty tax on earnings (as well as federal and state income taxes) may apply.1
- Investment earnings are 100% free from federal and Illinois state taxes when used for qualified education expenses.2
See the Bright Start 529 Plan Description for more details on our unique tax benefits.
Who’s Eligible?
You, your friends, family, neighbors and more…basically any citizen or taxpayer older than 18 can open or contribute to Bright Start 529. Here are the details.
Account owners
- At least 18 years old with a valid Social Security Number (SSN) or Taxpayer Identification Number (TIN)
- Person opening the account can designate a successor account owner in the event of their death
- Certain trusts, estates and corporations can also open an account with a valid taxpayer ID number*
Account Owner Footnote
- *Additional restrictions may apply; please refer to the Plan Description for details.↩
Beneficiaries
- The beneficiary is the student and needs only a valid SSN or TIN
- It ccan be your child, grandchild, even you—and you don’t need to be related to the beneficiary
- Only one beneficiary to an account, except when an entity creates a general scholarship account
Contributors
- Anyone can help pay for college with our easy and secure Ugift® platform
- Gifting may also provide advantages for estate and legacy planning; please consult your tax advisor2
An account can be opened in anyone’s name (like a parent, grandparent or family friend) and easily transferred later.
Qualifying expenses
With Bright Start 529, you have full control over how to use your funds. Here is the wide variety of qualified education expenses that can support your child in any path they choose to take:
- Tuition at any eligible private or public college or university, community college, technical college, graduate school and professional school across the U.S. and many abroad
- Certain room and board (housing and food) related expenses
- Fees, books, supplies and other equipment needed for enrollment and attendance
- Computers and related technology such as internet access fees, software or printers
- Certain additional enrollment and attendance costs for beneficiaries with special needs
- Pay for K-12 tuition expenses at a public, private or religious elementary, middle or high school—up to $10,000 annually federal tax-free3
- Pay for apprenticeship expenses federal tax-free—apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Actsup>3
Funds can also be used in three other helpful ways:
- Repay student loans—up to a $10,000 lifetime limit per individual federal tax-free (including principal and interest on any qualified education loan)4
- Transfer additional/leftover funds to another eligible beneficiary such as another child, grandchild or even yourself
- Bright Start 529 funds may be rolled over to a Roth IRA in the name of the beneficiary. Funds rolled over to a Roth IRA can be withdrawn free from federal income tax but may include recapture of the Illinois state tax deduction and state income tax. There are conditions that must be met, including the 529 Plan must have been in existence for at least 15 years. You should talk to a qualified professional about how tax provisions affect your circumstances.
Please see the state tax treatment of withdrawals section in the Plan Description for more information.
See plan details for additional information
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