Glossary

A

Account

A separate Account within the plan established by an Account Owner for a named Beneficiary pursuant to an Agreement.

Account application

The paper application completed and submitted to WA529 Invest, along with payment, to open an account and participate in the Program. It incorporates by reference the Program Agreement. Most 529 accounts are opened online.

Account owner

An individual 18 years or older, a trust, an estate, a partnership, an association, a company, a corporation, a limited liability company, a Custodian or any other legal entity who or that completes an online Enrollment or signs an Account Application Form establishing an Account. In certain cases, the Account Owner and Beneficiary may be the same person.

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 federal surtax required by the Code that is equal to 10% of the earnings portion of a Nonqualified Withdrawal.

Agreement

The legally binding contract between an Account Owner and the Committee. The current form of the Agreement is in the Agreement section of the Program Details Booklet. However, the Committee may amend the Agreement at any time and for any reason by giving notice of such amendments.

Apprenticeship program

An apprenticeship program registered and certified with the Secretary of Labor under Section 1 of the National Apprenticeship Act (29 U.S.C. 50).

Asset allocation

The distribution of funds within a portfolio among various investment alternatives or asset classes. Typically, asset allocation is expressed in percentages; for example, 40% equities, 40% fixed income and 20% cash.

Asset classes

Different types of investments; for example, equities (stocks), fixed-income (bonds) and money market (short-term investments).

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B

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 individual designated by an Account Owner, generally the student (or future student) for whom the Account is intended to provide benefits. The designated Beneficiary can be changed to a Member of the Family after an Account is opened and participation in WA529 Invest begins. If a state or local government or certain tax-exempt organizations purchase an interest in WA529 Invest as part of a scholarship program, the Beneficiary is the person who receives the interest as a scholarship.

Bond

A bond is a type of debt security in which an investor loans money to an entity (typically corporate or governmental) that 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.

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C

Capitalization (Cap)

The market value of a company’s outstanding securities, excluding current liabilities. Less than $3 billion is generally considered small cap; $2 billion to $10 billion is mid-cap; and more than $8 billion is large cap.

Code

The Internal Revenue Code of 1986, as amended from time to time.

Committee on Advanced Tuition Payment and College Savings

Established by the Enabling Legislation as administrator of WA529 Invest, the Committee also acts as distributor of WA529 Invest.

Coverdell Education Savings Account (Coverdell ESA or ESA)

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. This amount is less for higher earners as household income limitations 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 that holds and safeguards an individual’s Account assets for them.

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D

There are no glossary terms that begin with the letter “D.”

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E

Education IRA

See Coverdell Education Savings Account (Coverdell ESA or ESA).

Eligible educational institution

Includes virtually all accredited public, nonprofit and proprietary (privately owned profit-making) postsecondary institutions and certain educational institutions located outside the United States. Eligible Educational Institutions are those that are eligible to participate in the U.S. Department of Education’s Federal Student Aid Programs.

Enabling legislation

The law that established WA529 Invest, the Washington Education Savings Program formerly known as DreamAhead (Chapter 28B.95 RCW).

Enrollment Year Investment Option

A diversified portfolio that invests in equity, real estate, fixed income and/or cash and cash equivalents underlying investments with a risk profile that is based on the enrollment year of the Beneficiary. Contributions and earnings are typically more heavily weighted in equity investments when the Beneficiary is younger and more toward fixed income and cash and cash equivalent investments as the Beneficiary nears their enrollment in postsecondary education.

Entity account application

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.

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F

Family member

A Member of the Family of a Beneficiary is a person related to that Beneficiary as follows: (a) a son or daughter, or a descendant of either; (b) a stepson or stepdaughter; (c) a brother, sister, stepbrother or stepsister; (d) the father or mother, or an ancestor of either; (e) a stepfather or stepmother; (f) a son or daughter of a brother or sister; (g) a brother or sister of the father or mother; (h) a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; (i) the spouse of the Beneficiary or of any of the other foregoing individuals; or (j) 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 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.

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G

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.

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H

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.

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I

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 options

The investment choices offered by WA529 Invest. These include the Enrollment Year Investment Option, six (6) Multi-Fund Investment Options, three (3) Single Fund Investment Options and the Guaranteed Option.

IRA

Individual Retirement Account (IRA) is 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 (IRS) is the nation’s tax collection agency and administers the Internal Revenue Code enacted by Congress.

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J

There are no glossary terms that begin with the letter “J.”

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K

Kiddie tax

A special tax law that applies to dependent children under the age of 18 at the end of the tax year (or full-time students younger than 24) who have unearned income that is in excess of an annually determined threshold. Extra income beyond this threshold becomes taxable at the guardian’s rate.

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L

There are no glossary terms that begin with the letter “L.”

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M

Maximum account balance

The threshold after which additional contributions to an Account cannot be made. The maximum account balance is currently $500,000 and is applied against the aggregate value of all WA529 Invest Account(s) for the Beneficiary plus any Accounts for the same Beneficiary under other Washington Section 529 programs. The Committee periodically reviews and adjusts the maximum account balance to comply with the requirement under code Section 529 that ensures a 529 program prevents contributions in excess of those necessary to provide for the qualified higher education expenses of the Beneficiary.

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.

Member of the family

A person related to the Beneficiary as follows: (a) a child or a descendant of a child; (b) a brother, sister, stepbrother or stepsister; (c) the father or mother, or an ancestor of either; (d) a stepfather or stepmother; (e) a son or daughter of a brother or sister; (f) a brother or sister of the father or mother; (g) a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; (h) the spouse of any of the foregoing individuals or the spouse of the Beneficiary; or (i) a first cousin of the Beneficiary. For this purpose, a child includes a legally adopted child and a stepson or stepdaughter, and a brother or sister includes a half-brother or half-sister.

Multi-Fund Portfolio

WA529 Invest Portfolios that invest in a specified asset allocation. If you invest in a Multi-Fund Portfolio, your assets will remain invested in that Portfolio until you direct us to move those assets to a different Portfolio. Each Portfolio invests in multiple Underlying Funds, each of which is managed by either Nuveen, TIAA-CREF Life or Vanguard.

Mutual fund

A 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.

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N

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.

Nonqualified withdrawal

Any withdrawal from an Account that is not a qualified withdrawal or a qualified rollover.

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O

Other withdrawal

A withdrawal from an Account that is:

• A withdrawal paid to a beneficiary of the Beneficiary (or the estate of the Beneficiary) on or after the death of the Beneficiary;
• A withdrawal by reason of the disability of the Beneficiary;
• A withdrawal included in income because the Beneficiary received (a) a tax-free scholarship or fellowship, (b) veterans’ education assistance, (c) tuition assistance, or (d) any other nontaxable (tax-free) payments (other than gifts or inheritances) received as education assistance;
• A withdrawal by reason of the Beneficiary’s attendance at certain specified U.S. service academies;
• A withdrawal resulting from the use of American Opportunity or Lifetime Learning Credits as allowed under federal income tax law;
• A refunded withdrawal;
• A Rollover Withdrawal to another qualified tuition program, with appropriate documentation;
• An ABLE Rollover Withdrawal; or
• A direct rollover from an Account to a Roth IRA account for the same Beneficiary (Roth IRA Rollover).

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P

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.

Portfolio

One of the Enrollment Year, Multi-Fund, Single Fund or Guaranteed Portfolios available to Account Owners in WA529 Invest.

Program

Washington College Savings Program also known as WA529 Invest.

Program Manager

TIAA-CREF Tuition Financing, Inc (TFI) serves as Program Manager to WA529 Invest providing recordkeeping, customer service, account administration, and certain investment advisory services.

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Q

Qualified education loan

A student loan as defined in Code Section 221(d) of the Beneficiary or a sibling of the Beneficiary.

Qualified higher education expenses

Generally, these include the following:

• Tuition, fees and the costs of textbooks, supplies and equipment required for the enrollment or attendance of a Beneficiary at an Eligible Educational Institution;
• Certain costs of room and board of a Beneficiary for any academic period during which the Beneficiary is enrolled at least half-time at an Eligible Educational Institution;
• Expenses for services needed for a Beneficiary living with a disability that are incurred in connection with that Beneficiary’s enrollment or attendance at an Eligible Institution; and
• Computer or peripheral equipment, computer software, or Internet access and related services if it’s to be used primarily by the Beneficiary during any of the years the Beneficiary is enrolled at an Eligible Educational Institution.

For federal and Washington state tax purposes, Qualified Expenses also include:

• K-12 Tuition (up to an annual $10,000 limit);
• Expenses for fees, books, supplies and equipment required for the participation of a Beneficiary in an Apprenticeship Program; and
• Education Loan Repayments

Qualified withdrawal

Qualified Withdrawal means a withdrawal from an Account that is used to pay the Qualified Higher Education Expenses of the Beneficiary, or sibling of the Beneficiary, where applicable.

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R

Rollover withdrawal

A withdrawal resulting from a change of Beneficiary to another Beneficiary who is a Member of the Family, either within WA529 Invest or between qualified tuition programs, or a rollover of assets between qualified tuition programs for the same Beneficiary, provided another rollover or transfer for the same Beneficiary has not occurred in the previous twelve (12) months.

Roth IRA

An individual retirement account established under Section 408A of the Code.

Roth IRA rollover

A direct transfer from an Account on a Roth IRA on or after January 1, 2024, that meets the requirements set forth in Section 529 of the Code.

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S

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.

Single Fund Portfolio

WA529 Invest Portfolios that invest exclusively in a single Underlying Fund. If you invest in a Single Fund Portfolio, your assets will remain invested in that Portfolio until you direct us to move those assets to a different Portfolio. The Underlying Fund is managed by either Calvert, Nuveen or Vanguard.

Successor account owner

The Successor Account Owner is the person designated by the Account Owner during enrollment to succeed to ownership of the account upon the Account Owner’s death.

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T

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.

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U

UGMA/UTMA

The Uniform Gifts to Minors Act and the Uniform Transfers to Minors Act. Rules governing these types of accounts differ from state to state. Your WA529 Invest account may be funded from UGMA or UTMA accounts. Before you fund, you should consult a tax advisor regarding the rules applicable to the UGMA or UTMA account that will be used to fund your WA529 Invest account.

Underlying investments

Means the underlying investment funds that the portfolios invest in and may include mutual funds and other investment vehicles.

Unit

An ownership interest in a portfolio that is purchased by contributing to an Account.

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V

There are no glossary terms that begin with the letter “V.”

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W

WA529 Invest

A qualified tuition program sponsored and distributed by the Committee pursuant to Enabling Legislation, formerly known as DreamAhead.

Washington Student Achievement Council (WSAC)

The state agency that supports WA529 Invest and the GET Program, based on the Committee’s direction.

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X

There are no glossary terms that begin with the letter “X.”

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Y

There are no glossary terms that begin with the letter “Y.”

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Z

There are no glossary terms that begin with the letter “Z.”

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0-9

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.

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