Benefits & Tax Advantages

Make the Vermont Higher Education Investment Plan a part of your savings strategy.

Many families hope to see their child or loved one graduate from college someday, but it takes more than hope to get there. The Vermont Higher Education Investment Plan (VHEIP) is a 529 plan that can help your family get there.

Investing in education is a smart move and the tax advantages built into VHEIP can make it an important part of your overall college funding strategy:

Tax Advantages

> See the Difference Tax Advantaged Savings Can Make.

Contributions and Any Earnings Used to Pay for Qualified Higher Education Expenses are Federal and Vermont Income Tax-free.
A Vermont taxpayer (or, in the case of a married couple filing jointly, each spouse) is eligible for a non-refundable income tax credit of 10% of the first $2,500 per beneficiary contributed to VHEIP in each taxable year beginning on and after January 1, 2007 (i.e., a non-refundable income tax credit of up to $250 per beneficiary per taxable year). Rollovers from another state's qualified tuition plan into VHEIP are also eligible for this income tax credit. Pursuant to the Vermont Department of Taxes Technical Bulletin (TB-33), rollovers from another state's qualified tuition plan into the VHEIP are eligible for the tax credit to the extent the amounts were previously contributed to the other plan and provided the funds remain in the VHEIP for the remainder of the taxable year in which the funds were rolled into the VHEIP. See the Disclosure Booklet for more details.

A Vermont taxpayer who previously received this tax credit must repay a portion of that tax credit, up to a maximum of the total tax credits received by the taxpayer, if the taxpayer makes a non-qualified withdrawal or withdrawal resulting from the death or disability of, scholarship award to, or attendance at one of the Military Academies by the beneficiary of a VHEIP account. A taxpayer will make such repayment to the Vermont Department of Taxes through the filing of the taxpayer's State of Vermont income tax returns.

You May Be Eligible for a Vermont Income Tax Credit
The earnings portion of any distributions used to pay for qualified higher education expenses will be free from federal and Vermont income tax.

Federal Estate and Gift Tax Benefits
Contributions to VHEIP may reduce the taxable value of your estate. For example, contributions to the Plan, together with all other gifts from the account owner to the beneficiary, may qualify for an annual federal gift tax exclusion of $13,000 per donor ($26,000 for married contributors), per beneficiary. If an account owner's contribution to a VHEIP account for a beneficiary in a single year exceeds $13,000 ($26,000 for married contributors), the account owner may elect to treat up to $65,000 of the contributions, or $130,000 for joint filers, as having been made over a period of up to five years for federal gift tax exclusion. Consult your tax advisor.

Flexible Features

Anyone Can Open an Account
Parents, grandparents, relatives and friends who are U.S. citizens or resident aliens and at least 18 years of age may open a VHEIP account and contribute to a beneficiary*. Vermont state residency is not required. However, investors residing outside of Vermont should consider their own state's plan first as it may have tax advantages that are only available through that state's plan.

Funds Can be Used at Eligible Schools Nationwide
Whether your beneficiary decides to go to a private or public college or university, in-state or out-of-state, trade or graduate school, funds in the Account may be used at any eligible higher educational institution in the nation and many abroad.

Funds Can be Used for a Variety of Qualified Expenses
Funds can be used for tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs, certain expenses for "special needs" students.

Choice of Investment Options

Choice of Investments
VHEIP offers a choice of 6 investment options so you can choose an investment strategy that best suits your needs.

Low Minimum Contribution
The minimum initial contribution is $25 per investment option. The minimum subsequent contribution to an account is $25 per investment option. However, if your employer allows payroll deduction, the minimum subsequent contribution to your account may be as low as $15 per investment option per pay period.

No Income Limitations
There are no income limitations.

High Maximum Account Contribution Level of $352,800
You can contribute as much as $352,800 per beneficiary account as long as the total balance of all accounts for that beneficiary does not exceed $352,800. Accounts that have reached the maximum account balance limit may continue to accrue earnings.

Ability to Transfer to Another Beneficiary
If your beneficiary does not attend an eligible educational institution, you may name another eligible beneficiary for your Account. The new beneficiary must be a member of the previous beneficiary's family, as described in the Disclosure Booklet (PDF), in order to avoid having this change treated as a non-qualified withdrawal.

Low Plan Fees

With VHEIP there are no sales charges, start-up or maintenance fees. An annual asset-based management fee will be paid to TIAA-CREF Tuition Financing, Inc. to cover the cost of investment management and administrative services. The estimated underlying fund expenses range from 0.09% to 0.39%. Please note that the State of Vermont reserves the right to change the current fee and impose new or additional fees, expenses, charges or penalties in the future. For details on the management fee, please see fees and expenses.

Managed By A Leading Financial Services Provider

TThe State of Vermont selected TIAA-CREF Tuition Financing, Inc. to serve as plan manager for VHEIP. TIAA-CREF Tuition Financing, Inc., is an affiliate of TIAA-CREF, a financial services organization with more than 90 years of investment experience. Visit TIAA-CREF.

Easy Access to Your Account

You'll have online access to your account information 24 hours a day, or you can call and speak to one of our college-savings experts Monday through Friday, 8:00 am -8:00 pm ET. You'll receive quarterly and annual statements that show account activity. A separate confirmation statement will also be mailed following each transaction in your account.

You can also perform the following account transactions online: request a withdrawal from your account; rebalance funds among investment options, request e-Statement versus paper delivery, request e-Disclosure of Plan Disclosure Booklet and Participation Agreement and the Privacy Policy versus paper delivery, establish or change automatic contributions and view pending account contributions.

Funds Can be Used at Eligible Institutions Nationwide

Whether your beneficiary decides to go to a private or public college or university, in-state or out-of-state, trade or graduate school, funds in the account may be used at any eligible higher educational institution in the nation and many abroad.


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