July 18, 2022 – Illinois State Treasurer Michael Frerichs has some how-to tips to make the process of making withdrawals from one’s Bright Start 529 college savings plan easy.
“Parents are rightfully proud of all that their daughters and sons have achieved,” Frerichs said. “We aim to provide a friction-free experience so you can tap into the money that you’ve responsibly set aside since your child was just an infant.”
Whether you log in to your account to make the withdrawal or fill out a form and mail it in or call (877) 432-7444 to speak with an expert, there are a few key steps:
- If you’re using the Bright Start website, log in with your username and password and click “transact online” in the upper left corner, then click “withdrawal.”
- You’ll be asked what kind of withdrawal you would like to make. If you are paying for educational expenses, you want to do a “qualified withdrawal,” so click on that. The money can go toward tuition, fees, books, supplies, and equipment such as a computer or software if it is to be primarily used for school. Your Bright Start 529 money also can cover room and board if your student is enrolled at least half-time.
- The next step: You can make a partial or full withdrawal, or a full withdrawal and close your account. If your young adult is just starting school, you’ll want to choose “partial” withdrawal and fill in the dollar amount to let Bright Start know how much money you want to take out. You also will be asked to select the “withdrawal amount type.” You get to pick the dollar amount you want to withdraw from each of your portfolio funds, or you can pick a percentage to be withdrawn from each of the types of funds your 529 account is invested in.
- Next, you can tell Bright Start where to send the money. You can choose to have the funds electronically sent to your bank account or the university, or request a check be mailed to your home. Some schools require electronic payments to the institution. (If you have not already entered the school into your Bright Start account, you will have to add it. You will need your young adult’s student ID number, which the university can provide.)
- The final step to receive the money is to authorize and sign the withdrawal. For most parents, an electronic signature or handwritten (if you’re mailing in the form) signature will suffice. There are three scenarios where you will have to visit a qualified financial institution such as a bank to have your signature confirmed on-site for enhanced security: If you have changed your address within 15 days of the withdrawal request, do not already have your bank account information on file with Bright Start, or are asking to take out more than $50,000.
It is best to plan ahead when requesting a withdrawal. Please allow several days for your bank to process an electronic transfer to your account (or directly to a university or college) and 7-10 days if you want a check to be mailed. More details on withdrawing money are available on the Bright Start website. If you need help, you can call (877) 432-7444 or check out Bright Start’s help page.
If you’re filling out the paper Bright Start withdrawal form, the steps to take are similar to doing it online. You’ll need your account information and will be checking boxes instead of clicking on a website, and you’ll be signing the form with a pen instead of electronically.
Treasurer Frerichs serves as Trustee and Administrator of the gold medal-winning Illinois 529 College Savings Programs. Money in a 529 college savings account can be used at eligible educational institutions, including public and private, two-year, four-year colleges and universities and certain technical and vocational schools. The investment grows tax-free when spent on qualified expenses.
Since 2015, Frerichs has worked with program manager Union Bank & Trust to reduce fees and ensure more investment dollars go directly to college savings. These changes have helped the Illinois 529 College Savings Pool to grow by more than double from $7 billion to $16 billion in assets with more than 800,000 accounts.
For more information about the Treasurer’s Office 529 College Savings programs, which have won Morningstar’s highest consumer rating five years in a row, visit https://illinoistreasurer.gov/.
