Similar to how 401(k)s help you save for retirement*, 529 plans can help you save for college, tax free.** Withdrawals from 529s are tax-free if the earnings are used for Qualified Education Expenses.** It's a practical and valuable complement to your Upromise savings. For more information on how to open a 529 plan, please visit the 529 College Savings Plans section of the Upromise website.
A "Contributing Company" is any company that has become part of Upromise
to help you save for college by contributing a portion of your spending
with them to your Upromise account.
We use the term "Contributions" to refer to either the fixed amount or percentage of your spending you get back whenever you purchase eligible goods or services from a Upromise Contributing Company.
Qualified Education Expenses
The term "qualified education expenses" refers to expenses that can be paid with the funds in your 529 plan and qualify for the tax benefits associated with a 529 Plan. They generally include tuition, room and board, books, supplies, and school fees. Please refer to your specific 529 plan for details and the 529 College Savings Plans section of our website for more information.
A "Future Student" is any student a member is saving for through Upromise. You can save for as many students as you choose, including your child, the child of a family member or friend, your spouse, or a sibling. You can even save for yourself-regardless of your age-or for a child you hope to have in the future. To add a student to your account, visit the Future Students section of the Upromise website.
Loyalty Cards/Frequent Shopper Cards
Some of the companies that participate in Upromise offer "Loyalty Cards" or "frequent Shopper Cards". This way, they can give their customers rewards and discounts just for shopping with them. Your grocery card is a good example of a loyalty card. Upromise may ask for your loyalty card number so that you can get a college contribution when you shop with a particular company.
When you join Upromise, we automatically give you a holding account for your free money-this is your Upromise Account. Once you have signed up to get company contributions, your savings are automatically deposited into your Account on a periodic basis. But your Upromise Account will not bear interest. In order for you to make the most of your savings, you can link your Upromise Account to one or more 529 plans available through Upromise. By linking your Upromise account, you can give your college savings the opportunity to grow through a professionally managed, tax-advantaged 529 plan. See the 529 College Savings Plans section of our website for more information.
* Both 401(k) accounts and 529 plan accounts provide for tax-deferral. However, contributions made to a 401(k) account generally are not taxable for federal income tax purposes, while contributions to a 529 plan account are made with after-tax dollars. Additionally, withdrawals from a 401(k) account are subject to federal income tax, while withdrawals from a 529 Plan account currently are free from federal income tax if used to pay qualified higher education expenses.
** Unless the current law is extended, earnings withdrawn from a 529 plan account after 2010 to pay qualified higher education expenses will be subject to federal income tax.