FAQs

FAQs2016-11-09T15:19:32-06:00
Who can open an account?2016-11-09T15:19:35-06:00

A Bright Directions account can be established by an individual, certain legal entities, a custodian under a state’s UGMA or UTMA statute, or a trustee of a trust. The account owner may also be a tax-exempt Section 501(c)(3) organization or state or local government that establishes an account as part of a scholarship program. The account owner must be at least 18 years of age with a valid Social Security number or a taxpayer identification number. The account owner must also have a valid address in the U.S. (not a P.O. Box).

How do I open an account?2016-03-28T13:52:13-05:00

Your financial advisor can guide you through the steps to get enrolled.

Who can be a beneficiary?2016-03-28T13:52:31-05:00

The beneficiary is the future student and may be an individual, including the account owner, of any age. The beneficiary must have a valid Social Security number or taxpayer identification number. Each account can have one designated beneficiary.

Who can make contributions?2016-03-28T13:52:47-05:00

Parents, grandparents, or other relatives—anyone, really—can contribute to a Bright Directions account on behalf of the beneficiary. All funds contributed to the account are controlled by the account owner.

What are the Illinois state income tax benefits?2017-12-14T13:29:21-06:00

Contributions are Illinois tax-deductible up to:1

  • $10,000 per Illinois taxpayer
  • $20,000 for married Illinois taxpayers filing a joint return

December 31 deadline for contributions. To be deductible for a calendar year you must make the contribution before the end of that given calendar year. Contributions postmarked on or before December 31, will be treated as having been made in the year in which it was sent.

This deduction is available to Illinois taxpayers. In addition, investments are not subject to Illinois state income tax while in a Bright Directions account. And when withdrawn for qualified college expenses, they are not subject to federal or Illinois state income tax.2

Ask your tax professional for additional information.

1Individuals who file individual Illinois state income tax returns can deduct up to $10,000 per tax year ($20,000 if filing jointly) for their total, combined contributions to the Bright Directions College Savings Program, the Bright Start College Savings Program, and CollegeIllinois! during that tax year. The $10,000 (individual) and $20,000 (joint) limit on deductions will apply to total contributions made without regard to whether the contributions are made to a single account or more than one account. The amount of any deduction previously taken for Illinois income tax purposes is subject to recapture in the event an Account Owner takes a Nonqualified Withdrawal from an Account or if such assets are rolled over to a non-Illinois 529 plan.

2Withdrawals used to pay for Qualified Higher Education Costs are free from federal and Illinois state income tax. Qualified higher education expenses include tuition, fees, books, supplies, and equipment required for enrollment or attendance; certain room and board expenses incurred by students who are enrolled at least half-time; the purchase of computer or peripheral equipment, computer software, or Internet access and related services, if used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution; and certain expenses for special needs services needed by a special needs beneficiary.

How are contributions made?2016-11-09T15:19:35-06:00

The plan is very flexible. You can contribute by:

  • Sending a check.
  • Establishing an automatic investment plan.
  • Rolling over funds from another 529 plan.
  • Invite family and friends to make a contribution to your account through Bright Directions GiftED.
  • Establishing a payroll deduction at work (check with employer for availability).
  • Transferring reward dollars earned with a Bright Directions 529 College Savings Rewards Card.
Can I transfer assets from another 529 plan?2016-03-28T13:57:15-05:00

Yes. You can complete a rollover form to transfer assets from another 529 plan and gain the benefits of the Illinois state income tax deduction. Only the original investment (not the earnings portion) is eligible for the Illinois state income tax deduction.

A same-beneficiary rollover/transfer is allowed once in a 12-month period. Additional transfers are allowed but require a change of beneficiary. Check with your investment professional for further assistance with rollovers.

Is the program audited?