PROGRAM DETAILS BOOKLET - MAY 2018 - DREAMAHEAD
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Program Details Booklet May 2018
DreamAhead College Investment Plan
Program Details Booklet
May 2018
Notices
Program Details Booklet
This Program Details Booklet has been identified by the Committee on Advanced Tuition Payments and
College Savings as the Offering Material (as defined in the College Savings Plans Network Disclosure
Principles, Statement No. 6, adopted July 1, 2017) intended to provide substantive disclosure of the terms
and conditions of an investment in DreamAhead.
If you or the Beneficiary are not a Washington State resident, before investing you should consider whether
you or the Beneficiary’s home state offers a Qualified Tuition Program that provides its taxpayers with
favorable state tax and other state benefits such as financial aid, scholarship funds and protection from
creditors that may only be available through an investment in the home state’s Qualified Tuition Program,
and which are not available through an investment in DreamAhead. Since different states have different tax
provisions, this Program Details Booklet contains limited information about the state tax consequences of
investing in DreamAhead.
Keep in mind that state-based benefits should be one of many appropriately weighted factors to consider
when making an investment decision. In addition, you should periodically assess, and if appropriate, adjust
your 529 Plan investment choices with your time horizon, risk tolerance, and investment objectives in
mind.
None of the Program Administrators insures or guarantees Accounts or investment returns on Accounts.
Investment returns are not guaranteed. Your account may lose value.
This Program Details Booklet contains important information you should review before opening an
Account in DreamAhead, including information about the benefits and risks of investing. Please read it
carefully and save for future reference. Capitalized terms used in this Program Details Booklet are defined
in the Glossary (beginning on page 63).
Accuracy of Information in Program Details Booklet
The information in this Program Details Booklet is believed to be accurate as of the cover date but is
subject to change without notice. No one is authorized to provide information that is different from the
information in the most current form of this Program Details Booklet, and participants in DreamAhead will
agree that they have relied solely on the information contained in this Program Details Booklet, and the
amendments and written supplements to this Program Details Booklet.
Other Important Information
529 Plans are intended to be used only to save for Qualified Expenses. DreamAhead is not intended to
be used, nor should it be used, by any taxpayer for the purpose of evading federal or state taxes or tax
penalties. Taxpayers should seek tax advice from an independent tax advisor based on their own particular
circumstances.
dre a m a h e ad. wa. g ov | 2Table of Contents
Getting Started........................................................................................................... 4
Summary ................................................................................................................... 5
My Account................................................................................................................ 7
Opening My Account ............................................................................................................7
Contributing to My Account................................................................................................. 8
Maintaining My Account .................................................................................................... 14
Using My Account .............................................................................................................. 17
Closing My Account........................................................................................................... 20
Fees .........................................................................................................................21
Year of Enrollment Portfolio Fee Structure Tables ................................................................22
Static Portfolio Fee Structure Tables ....................................................................................23
Service-based and Other Fees ..............................................................................................23
Approximate Cost for a $10,000 Investment........................................................................24
Important Risks You Should Know About ................................................................... 26
Investment Choices................................................................................................... 30
Investments Overview ....................................................................................................... 30
Year of Enrollment Investment Option ................................................................................ 31
Static Investment Option ....................................................................................................36
Portfolio Profiles.................................................................................................................37
Underlying Fund Descriptions ............................................................................................42
Descriptions of Principal Risks by Fund Company................................................................48
Additional Investment Information ....................................................................................53
Investment Performance..................................................................................................... 55
Important Federal Tax Information ............................................................................ 56
General Information ................................................................................................. 59
Plan Administration ................................................................................................. 62
Glossary................................................................................................................... 63
Agreement ............................................................................................................... 67
dre a m a h e a d. wa. g ov | 3Getting Started
Getting started with DreamAhead is easy. Just follow these steps:
1. Read this Program Details Booklet in its entirety and save it for future reference.
It contains important information you should review before opening an Account,
including information about the benefits and risks of investing.
2. Gather your information:
a. Your Social Security number and date of birth
b. Your permanent address
c. Your Beneficiary’s Social Security number and date of birth (if applicable)
d. Your email address
e. Your checking or savings account number and your bank’s routing number (if you
want to contribute electronically with a bank transfer)
3. Go online to www.dreamahead.wa.gov and click on Open an Account. The easy-to
follow directions will guide you through the enrollment process. Enrolling online is
fast, convenient, and secure. In as little as 10 minutes, you can be fully signed up and
saving for college. Or, if you prefer, you can complete and mail the Enrollment Form
that is downloadable from the forms section of the site.
dre a m a h e ad. wa. g ov | 4Summary
This Program Details Booklet provides you with Fees (p. 21)
important information that can help you decide
DreamAhead has no commissions, loads, or sales
whether to open a DreamAhead College Investment
charges. The Total Annual Asset-Based Fee varies
Plan Account. You can find the key terms used
from 0.266% to 0.400%, depending upon the
throughout this Program Details Booklet in the
Portfolio(s) you choose. In addition, we charge an
Glossary, beginning on page 63. This Summary
Annual Account Maintenance Fee of $35 to each
provides highlights of the features of DreamAhead
Account. We also charge certain transaction-based
and tells you where you can find more information
fees that may apply to your Account. In this section,
about each topic.
you can find a detailed description of the Fees
associated with your DreamAhead Account.
About DreamAhead
DreamAhead is one of two qualified tuition Important Risks You Should Know About
programs administered and distributed by the (p. 26)
Committee on Advanced Tuition Payment and
As with any investment, there are risks involved
College Savings (Committee). DreamAhead
in investing in DreamAhead, including the risk of
is designed to help individuals and families
investment losses; the risk of changes in federal
throughout the U.S. save for college in a tax-
and state laws, including federal and state tax laws;
advantaged way, and offers valuable advantages
the risk of Program changes, including changes in
including tax-deferred growth, generous
Fees; and the risk that contributions to DreamAhead
contribution limits, attractive Investment Options,
may adversely affect the eligibility of you or your
and professional investment management. The
Beneficiary for financial aid or other benefits.
Committee also offers a 529 prepaid college
To learn more about the risks, please thoroughly
tuition program, known as the Guaranteed
read and carefully consider the information in
Education Tuition (GET) program, that is only
this section and throughout this Program Details
open to Washington residents. GET assesses
Booklet, and ask your tax, legal and investment
different fees and withdrawal limitations than
advisors about these risks.
DreamAhead. For additional information
on GET, please visit www.get.wa.gov.
Investment Choices (p. 30)
What’s Inside When you enroll in DreamAhead, you choose to
invest using at least one of two different investment
My Account (p. 7) approaches, based upon your investing preferences
DreamAhead is open to U.S. citizens or resident and risk tolerance. You can choose between the
aliens throughout the U.S. You, as the Account Year of Enrollment Investment Option or the Static
Owner, maintain complete control over the Investment Option, or a mix of both.
Account and can open Accounts for any number • Year of Enrollment Investment Option
of Beneficiaries, including yourself. This section This option offers Portfolios designed for
will guide you through the details of opening different Enrollment Years (anticipated year of
a DreamAhead Account, contributing to your enrollment at college) in two-year increments.
Account, maintaining your Account, using your In addition, the Year of Enrollment Investment
savings to pay for Qualified Expenses, and closing Option has three risk tolerances (Conservative,
your Account. To open an Account, you must Moderate or Growth) to choose from. In each
complete your Enrollment online or send us a Portfolio, your money is moved automatically
completed Enrollment Form, which is a contract to progressively more conservative
between you, as the Account Owner, and the investments as your Beneficiary approaches
Committee, establishing the obligations of each. the targeted Year of Enrollment. Each Portfolio
invests in one or more Underlying Fund(s)
managed by Fidelity, JP Morgan, Schwab and/
or Vanguard.
dre a m a h e a d. wa. g ov | 5• Static Investment Option Plan Administration (p. 62)
This option offers seven (7) Portfolios. Unlike
This section summarizes the administration of
the Portfolios in the Year of Enrollment
DreamAhead.
Investment Option, if you invest in a Static
Portfolio, the composition of investments • The Committee administers and provides
within the Portfolio remains fixed over time, oversight of DreamAhead and the GET
subject to periodic re-balancing back to the Program.
Portfolio guidelines and any changes in • The Washington Student Achievement
investment policy made by the Committee. Council supports DreamAhead and the GET
Each Portfolio invests in one or more Program, based on the Committee’s direction.
Underlying Fund(s), each of which is managed
• Sumday Administration, LLC serves as the
by either Fidelity, JP Morgan, Schwab and/or
Program Manager of DreamAhead. Sumday
Vanguard. If you invest in a Static Portfolio,
Administration, LLC and its affiliates have
your assets will not shift to more conservative
overall responsibility for DreamAhead’s day
investments over time unless you specifically
to-day operations, including recordkeeping,
direct us to move your assets to another
customer service and administrative services.
Portfolio.
• Sumday Administration LLC’s affiliate
You may change your Investment Options for Lockwood Advisors, Inc. provides investment
balances currently in your DreamAhead Account advisory services to the Committee for
up to two times per calendar year, or if you change DreamAhead.
your Beneficiary. You can apply new contributions • Sumday Administration, LLC and Lockwood
to your existing Portfolio selections, or to new Advisors, Inc. are affiliates of BNY Mellon.
Portfolios. This section also provides details on how
to view investment performance of each Portfolio. Glossary (p. 63)
This section provides definitions of terms contained
Important Federal Tax Information (p. 56)
in this Program Details Booklet. Note that terms
As a 529 Plan, DreamAhead offers federal tax defined in the glossary (other than you and your)
benefits, including tax-deferred earnings. Any appear with initial capital letters when referenced
earnings withdrawn from your Account are in this document.
free of federal income tax when applied toward
Qualified Expenses. If you take a Non-Qualified Agreement (p. 67)
Distribution, any earnings are subject to federal
and applicable state income taxes and an additional In this section, we ask you to review and
10% federal tax penalty (Distribution Tax). If you acknowledge your rights and responsibilities
take an Other Distribution, any earnings may be in connection with your enrollment in the
subject to federal and applicable state income DreamAhead College Investment Plan. You must
taxes, but not the Distribution Tax. Learn more review this agreement in detail prior to completing
about tax considerations associated with investing an Enrollment in the Program. Upon enrolling in
in DreamAhead by thoroughly reviewing this the Program you will be prompted to acknowledge
section. Before you invest, you should consult an your understanding of, and agreement with the
independent tax advisor regarding the application terms, conditions and information contained in the
of tax laws to your particular circumstances. Program Details Booklet and the Agreement.
General Information (p. 59)
In this section you will learn about the rights
and obligations associated with your Account,
considerations related to changes to your Account,
this document, and state and federal laws, and
claims against your Account.
dre a m a h e a d. wa. g ov | 6My Account
Opening My Account
different Beneficiaries. Different Account Owners
At a Glance
may also have an Account for the same Beneficiary
In this section, you will learn more about
within DreamAhead, but contributions to an
▸ Who can be an Account Owner Account will be limited
if the total assets held A Beneficiary can
▸ Successor Owners in all Accounts for that
be of any age and
Beneficiary, taking into
▸ Beneficiaries can be a child,
account the proposed
contribution, exceed grandchild, other
or would exceed the relative or even
Account Owner/Custodian
Maximum Account someone not
To participate in DreamAhead, you must complete Balance limit. Please related to you.
the online Enrollment process or the Enrollment see Contributing To
Form and open an Account either online or by My Account — Maximum Account Balance Limit
mail. You must be a U.S. citizen (or a resident on page 12. The Beneficiary may be of any age;
alien), or an entity that is organized in the U.S., however, the Beneficiary must be an individual and
be 18 years or older, and have a valid permanent not a trust or other entity. A Beneficiary does not
U.S. residential address. You may also open an have to be named at Enrollment when the Account
Account as a custodian for a child under the Owner is a tax-exempt organization as defined in
Uniform Gift to Minors Act / Uniform Transfer the Code, and the Account has been established as a
to Minors Act (UGMA/UTMA). By signing the general scholarship fund.
Enrollment Form or completing your online
Enrollment, as applicable, you consent and agree
that your Account is subject to the terms and Control Over the Account
conditions of this Program Details Booklet. Although other individuals or entities may make
contributions to your Account, you, as the Account
Successor Owner Owner, retain control of all contributions made
as well as all earnings credited to your Account. A
You may designate a Successor Owner (to the Beneficiary who is not also the Account Owner has
extent permissible under applicable law) to no control over any of the Account assets. Except
succeed to all of your rights, title, and interest in as required by law, only you may direct transfers,
your Account upon your death. You can make rollovers, selection of Investment Options,
this designation online during Enrollment, on the investment changes, withdrawals, and Beneficiary
Enrollment Form, or in writing. We must receive changes as the Account Owner. Prior to other
and process your request before the Successor individuals or entities making contributions to your
Owner designation can be effective. You may Account, you warrant that you will communicate
revoke or change the designation of a Successor to them the risks and material information of
Owner at any time online or by submitting a investing in DreamAhead that are disclosed in this
Manage Successor Owner Form. You can access Program Details Booklet.
forms at www.dreamahead.wa.gov or by calling
us at 1-844-529-5845.
Documents in Good Order
Beneficiary To process any transaction in DreamAhead, all
necessary documents must be in good order,
You can set up an Account for the benefit of which means signed and verified when required
your child, grandchild, spouse, yourself, another and properly, fully, and accurately completed, as
relative, or even someone not related to you. determined by the Program Administrators.
Each Account can have only one Beneficiary at
any time. You may have multiple Accounts for
dre a m a h e a d. wa. g ov | 7My Account
Contributing to My Account
allocated to each of the Portfolios you selected. You
At a Glance
can make subsequent contributions to different
In this section, you will learn more about
Portfolio(s) than the selection(s) you make during
▸ Different Ways to Contribute to your Account your online Enrollment or on your Enrollment
Form.
▸ Automatic Investment Plans
▸ Payroll Deductions Contribution Date
Except for AIP and EFT contributions and
▸ Rollovers from other 529 Plans payroll direct deposits, we will credit any money
contributed to your Account on the same Business
Minimum Contributions Day if we receive the contribution in good order and
prior to the close of the New York Stock Exchange
To open an Account, you must make an initial
(NYSE), normally 4 p.m., Eastern Time. Note that
contribution of at least $25 per Portfolio. After
certain contributions may take time to be received
that, all transfers (contributions, withdrawals, and
by DreamAhead including checks mailed to us and
monthly transfers) must be at least $5 per Portfolio
EFT transfers from your bank. We will credit the
from which funds are contributed or withdrawn.
contribution on the next succeeding Business Day
The Committee has the discretion and reserves the
if we receive it in good order after the close of the
right to waive the minimum contribution.
NYSE.
You can make your initial and any additional
contributions by check, Electronic Funds Transfer/ Allocation of Future Contributions
Automated Clearing House (EFT or ACH), an At the time of enrollment, you must select how you
Automatic Investment Plan (AIP) which is a want your contributions allocated. You must also
recurring monthly investment, payroll deduction, select how you want your subsequent contributions
rolling over assets from another Qualified Tuition allocated at the time of each investment unless
Program, moving assets from an UGMA/UTMA you have created an AIP. You may move existing
account or Coverdell Education Savings Account, DreamAhead assets to different Portfolios up to two
or by redeeming U.S. Savings Bonds. We will not times per calendar year. You may also move assets
accept contributions made by cash, money order, at the same time you change your Beneficiary.
travelers checks, foreign checks, checks dated
more than 180 days from the Contributions by Check
date of receipt, checks post- You can open
dated more than seven (7) You may make your initial contribution by
a DreamAhead check. The initial minimum contribution of $25
days in advance, checks with
Account with must accompany your
unclear instructions, starter
as little as $25. Enrollment Form. Any There are several
or counter checks, credit
card or bank courtesy checks, additional contributions different ways to
third-party personal checks over $15,000 (per day), you make by check
make contributions
instant loan checks, or any other check we deem must be at least $5 per
investment Portfolio
to your Account.
unacceptable. No stocks, securities, or other non-
cash assets will be accepted as contributions. selected. Checks must
be made payable to DreamAhead. Third-party
You can allocate each contribution among any of the personal checks up to $15,000 (per day) must be
Portfolios. However, the minimum allocation per payable to you or the Beneficiary and properly
selected Portfolio is $5. For example, if you make a endorsed by you or the Beneficiary to DreamAhead.
$100 contribution to your Account to be allocated
among 3 Portfolios, a minimum of $5 must be
dre a m a h e ad. wa. g ov | 8Automatic Investment Plan (AIP) and/or additional contributions to your Account,
provided you have submitted certain information
You may contribute to your Account by
about the bank account from which the money
authorizing us to receive monthly automated
will be withdrawn, subject to certain processing
debits from your checking or savings account,
restrictions. You can complete transactions through
if your bank is a member of the Automated
the following means: by providing EFT instructions
Clearing House (ACH), subject to certain
in the online Enrollment process or on the paper
processing restrictions. You can begin an AIP
Enrollment Form, by submitting EFT instructions
either when you enroll by completing the
online after enrollment at www.dreamahead.wa.gov
AIP section of the online Enrollment process
or in writing by submitting the appropriate form.
or the paper Enrollment Form, or after your
Debit requests that we receive in good order:
Account has been opened, either online or in
writing by submitting the appropriate form. AIP • before 1 p.m., Pacific Time, will generally be
contributions must equal at least $5 per Portfolio given a trade date of the second Business Day
per month. Your AIP authorization will remain after the date of receipt and will be effected
in effect until we have received and processed at that day’s closing price for the applicable
your notification of its termination. Portfolio. If your bank processes our request
for withdrawal from your bank account on the
You may terminate your AIP at any time. Any first Business Day after the date of receipt, the
changes to, or termination of, an AIP must EFT debit from your bank account will occur
occur at least three (3) Business Days before a on the second Business Day after we receive
scheduled debit from your bank account and will the request.
become effective as soon as we have received and • after 1 p.m., Pacific Time, will generally be
processed your request. given a trade date of the third Business Day
after the date the request is received, and will
There is no charge for enrolling in an AIP. Debits be effected at that day’s closing price for the
from your bank account will occur prior to the applicable Portfolio. If your bank processes
day you indicate, provided the day is a regular our request for withdrawal from your bank
Business Day. If the day you indicate falls on a account on the second Business Day after the
weekend or a holiday, the AIP debit will occur on date of receipt, the EFT debit will occur on
the next Business Day. the third Business Day after we receive the
request.
An Automatic Investment Plan
allows you to set up contributions We do not charge a fee for contributing by EFT.
to your Account by making
monthly automated debits from Limitations on AIP and EFT Contributions
your checking or savings account. We may place a limit on the total dollar amount
per day you may contribute to your Account by
The start date for an AIP must be at least three EFT and will reject contributions in excess of that
(3) Business Days from the date of submission of limit. If you plan to contribute a large dollar amount
the AIP request. If a start date for an AIP is less to your Account by EFT, you should contact a
than three (3) Business Days from the date of Customer Service Representative at 1-844-529-5845
the submission of the AIP request, the AIP will to inquire about the current limit prior to making
start on the requested day in the next succeeding your contribution. An EFT or AIP contribution may
month. fail because the bank account on which it is drawn
contains insufficient funds or because you did not
provide correct and complete banking instructions
Electronic Funds Transfer (EFT)
(Please see Failed Contributions on page 13). If
You may also contribute by EFT (also known as we cannot process your AIP or EFT contribution
ACH). Each contribution must be in an amount because the bank account on which it is drawn
of at least $5 per Portfolio selected. You may contains insufficient funds, because of incomplete
authorize us to withdraw funds by EFT from information or inaccurate information, or if the
a checking or savings account for both initial transaction would violate processing restrictions, we
dre a m a h e ad. wa. g ov | 9reserve the right to suspend processing of future Rollover Contributions
AIP and EFT contributions. All bank accounts used
You can make your initial investment by rolling
to make AIP or EFT contributions must be in the
over assets from another Qualified Tuition Program
name of the Account Owner or Beneficiary, (only if
to DreamAhead for the benefit of the same
authorized by the Beneficiary).
Beneficiary. You can also rollover assets from your
Account or another Qualified Tuition Program to a
Payroll Direct Deposits Beneficiary who is a Member of the Family of your
You may be eligible to make automatic, periodic current Beneficiary. (Please see Options for Unused
contributions to your Account by payroll Contributions: Changing a Beneficiary, Transferring
deduction (if your employer offers this service). Assets to Another of Your Accounts on page 14).
You may set up payroll deduction for subsequent A rollover for the same Beneficiary is restricted to
contributions after your Account is opened. The once in each 12-month period.
minimum payroll deduction contribution is $5
per paycheck. We will only permit contributions Incoming rollovers can be direct or indirect. A
by payroll deduction from employers able to meet direct rollover is the transfer of money from one
our operational and administrative requirements. Qualified Tuition Program directly to another.
You must complete payroll deduction instructions An indirect rollover is the transfer of money to
by downloading and completing the Payroll you from an account in another state’s Qualified
Deduction Form at www.dreamahead.wa.gov. You Tuition Program; you then contribute the money
will need to print these instructions and submit to your Account. To avoid federal income tax
them to your employer. Payroll direct deposits that consequences and the Distribution Tax, you must
we receive in good order: contribute an indirect rollover within 60 days of
• before 1 p.m., Pacific Time, will generally be the distribution. You should be aware that not all
given a trade date of the first Business Day states permit direct rollovers from Qualified Tuition
after the date of receipt and will be effected Programs. In addition, there may be state income
at that day’s closing price for the applicable tax consequences (and in some cases state-imposed
Portfolio. penalties or fees) resulting from a rollover out of a
state’s Qualified Tuition Program.
• after 1 p.m., Pacific Time, will generally be
given a trade date of the second Business Day
Refunded Distributions
after the date the request is received, and will
be effected at that day’s closing price for the In the event the Beneficiary receives a refund from
applicable Portfolio. an Eligible Educational Institution, those funds will
be eligible for re-contribution to your Account if:
Gift Contributions • The Beneficiary of your Account is the same
Third parties may make gift contributions to your beneficiary receiving the refund; and
Account via two channels: • The re-contribution is made within 60 days of
• Paper Form. Giftors can download and the date of the refund.
complete a paper gifting form, attach a check
for the gift amount and mail to DreamAhead. The re-contributed amount will not be subject to
The form can be found at www.dreamahead. federal income tax or the Distribution Tax. For tax
wa.gov/forms/. We do not charge a Fee for purposes, please maintain proper documentation
gifts made using a paper form. evidencing the refund from the Eligible Educational
Institution.
• E-Gifting. Online gifting can be performed
if you or the Beneficiary creates an online
Moving Assets From an UGMA/UTMA
gifting page for your Account. Third parties
can then contribute via the E-Gifting link. We Account
may assess Fees for E-Gifting. If you are the custodian of an UGMA/UTMA
account, you may be able to open an Account in
your custodial capacity, depending on the laws
of the state where you opened the UGMA/UTMA
account. These types of accounts involve additional
dre a m a h e a d . wa. g ov | 10restrictions that do not apply to regular 529 Plan in DreamAhead, contributions from an existing
accounts. We are not liable for any consequences UGMA/UTMA account to an Account would
related to your improper use, transfer, or require liquidation of non-cash assets held by the
characterization of custodial funds. existing UGMA/UTMA account, which would
generally be a taxable event. Please contact a tax
In general, your UGMA/UTMA custodial Account advisor to discuss the consequences of transferring
is subject to the following additional requirements assets held in an existing UGMA/UTMA account
and restrictions: and what the implications of a transfer may be for
• You must indicate that the Account is an your specific situation.
UGMA/UTMA Account by completing the
appropriate information during online Moving Assets From a Coverdell Education
Enrollment or checking the appropriate box Savings Account (ESA)
on the paper Enrollment Form; You may fund your Account by moving assets
• You must establish an Account in your from a Coverdell ESA. Please indicate this on the
custodial capacity separate from any Accounts paper Enrollment Form or paper Contribution
you may hold in your individual capacity; Form for any additional contributions that result
• The actions you take in connection with the from the liquidation of ESA assets. Unlike UGMA/
Account, including your authorization of the UTMA accounts, the Beneficiary may be changed
distributions, will be governed by applicable to a Member of the Family of the beneficiary of an
UGMA/UTMA law; ESA. Making distributions from an ESA to fund an
Account for the same Beneficiary is not a taxable
• You will not be able to change the Beneficiary transaction. Prior to moving assets from a Coverdell
of the Account (directly or by means of a ESA, you should consult your tax advisor for more
Rollover Distribution), except as may be information.
permitted by applicable UGMA/UTMA law;
• You will not be permitted to change the Redeeming U.S. Savings Bonds
Account Owner to anyone other than a (Series EE or Series I Bonds)
successor Custodian during the term of the
custodial account under applicable UGMA/ You may fund your Account with proceeds from
UTMA law; the redemption of certain U.S. Savings Bonds.
In certain cases, you may redeem U.S. Savings
• You must notify us when the custodianship Bonds for this purpose without paying tax under
terminates, and your Beneficiary is legally the education tax exclusion. Please visit www.
entitled to take control of the Account by savingsbonds.gov to determine if you are eligible
completing the appropriate form. At that for this exclusion.
time, the Beneficiary will become the Account
Owner and will become subject to the
provisions of DreamAhead applicable to non-
Additional Form Requirements for
UGMA/UTMA Account Owners; Rollovers, ESAs, and Series EE or Series I
• Any tax consequences of a distribution from
Bonds
an Account will be imposed on the Beneficiary Rollover contributions and other transfers to
and not on the Custodian; and your Account must be accompanied by a Rollover
Form as well as any other information we may
• We may require you to provide
require, including the information required for
documentation evidencing compliance with
certain contributions described below. To roll over
the applicable UGMA/UTMA law.
assets into an Account in DreamAhead, you must
complete a Rollover Form and an Enrollment Form.
In addition, certain tax consequences described
under Important Federal Tax Information starting
When making a contribution to your Account
on page 56 may not be applicable in the case of
with assets previously invested in an ESA or assets
Accounts opened by a custodian under UGMA/
received from a redemption of Series EE and Series
UTMA. Moreover, because only contributions
I bonds, or through a rollover from anther Qualified
made in cash form may be used to open an Account
dre a m a h e a d . wa. g ov | 11Tuition Program, you must indicate the source of Regardless of the calendar year for which a
the contribution and provide us with the following contribution is deductible, the date of the
documentation: contribution (and thus the price of the Units
• In the case of a contribution from an ESA, purchased with the contribution) will be determined
an account statement issued by the financial as discussed above the applicable contribution
institution that acted as custodian of the method.
account that shows basis and earnings.
Trusts, Corporations, and other
• In the case of a contribution from the
redemption of Series EE or Series I U.S. Entities as Account Owners
Savings Bonds, an account statement or Form An Account Owner that is a trust, partnership,
1099-INT issued by the financial institution corporation, association, estate, or another
that redeemed the bond showing interest acceptable type of entity must submit
received upon the redemption of the bond. documentation to DreamAhead to verify the
• In the case of a rollover, either you or the existence of the entity and identify the individuals
previous Qualified Tuition Program must who are eligible to act on the entity’s behalf.
provide us with a statement issued by the Examples of appropriate documentation include a
distributing program that shows the basis and trust agreement, partnership agreement, corporate
earnings portions of the distribution. resolution, articles of incorporation, bylaws,
or letters appointing an executor or personal
Please visit the DreamAhead website at representative. You must submit this documentation
www.dreamahead.wa.gov or contact a Customer when establishing an Account. We will not be able
Service Representative at 1-844-529-5845 for any to open your Account until we receive all of the
of the forms you may need. Until we receive the information required on the Enrollment Form and
documentation described above, as applicable, we any other information we may require, including
will treat the entire amount of the contribution as the documentation that verifies the existence of the
earnings in the Account receiving the transfer. Account Owner. If the Account Owner is an agency
or instrumentality of a state or local government,
or tax-exempt organization as defined in Section
Year End Contributions
501(c)(3) of the Code, has established the Account
We will generally treat contributions sent by U.S. as a general scholarship fund, and is therefore not
mail as having been made in a given year if checks required to name a Beneficiary and is not subject
are received and processed on or before December to the Maximum Account Balance limit, the
31 of the applicable year, provided the checks are organization must provide verification (e.g., an IRS
subsequently paid by the bank on which they are determination letter) of its exempt status when the
drawn. It is important, therefore, to ensure that Account is established.
checks sent by U.S. mail are postmarked with
sufficient time to allow for processing.
Maximum Account Balance limit
With respect to EFT contributions, for tax purposes You or others can contribute to your Account at any
we will generally treat contributions received by time, as long as the contribution would not cause
us in a given year as having been made in that year your Account to exceed the Maximum Account
if you submit them on or before December 31 of Balance of $500,000 for a Beneficiary. All accounts
that year and the funds are successfully deducted for the same Beneficiary under all Qualified Tuition
from your checking or savings account at another Programs sponsored by the State are counted toward
financial institution. the Maximum Account Balance regardless of the
Account Owner. Earnings may cause the account
We will generally consider contributions made balances for a Beneficiary to exceed the Maximum
through an AIP as received in the year the AIP debit Account Balance and no further contributions will
has been deducted from your checking or savings be allowed at that point. If, however, the market
account at another financial institution. (Please see value of your Account and other applicable accounts
Automatic Investment Plan (AIP) above). for the same Beneficiary falls below the Maximum
Account Balance, additional contributions will be
accepted.
dre a m a h e a d. wa. g ov | 12If a contribution is made to an Account that Confirmation of Transactions
would cause the aggregate value of all accounts
We will send you a separate confirmation notice
for the same Beneficiary to exceed the Maximum
with respect to each transaction in your Account(s),
Account Balance, the entirety of the contribution
except for Account assets being automatically
amount will be returned to you or the contributor,
moved within the Year of Enrollment Options as
as applicable. If you are enrolled in an AIP, the
your Beneficiary ages. Each notice will instruct you
AIP may be discontinued. Should we increase the
to log on to your Account to view your transaction
Maximum Account Balance limit, we will accept
details. Alternatively, if you have elected to
additional contributions up to the new Maximum
receive paper notices, we will mail you summary
Account Balance limit.
statements on a quarterly basis. Each statement
will indicate: the dollar amount of the transaction,
Excess Contributions the unit cost of the Portfolios, the number of
We will return the entirety of any contribution Units you own in each Portfolio as a result of the
received that would cause the Account balance transaction and the date of the transaction. If
to exceed the Maximum Account Balance (as you receive a statement that you believe does not
determined by the close of business on the day accurately reflect your instructions — for example,
prior to our receipt of your contribution) to the the amount invested differs from the amount you
contributor, without adjustment for gains or contributed, or the contribution was not invested
losses. If a contribution is applied to an Account in the particular Portfolio(s) you selected — you
and we later determine the contribution to have 60 days from the date of the confirmation
have caused the aggregate market value of the or quarterly statement to notify us of the error.
account(s) for a Beneficiary in all Qualified Tuition (Please see Maintaining My Account — Correcting
Programs sponsored by the State to exceed the Errors on page 15).
Maximum Account Balance, we may refund the
excess contributions and related earnings to the We use reasonable procedures to confirm that
contributor. Any refund of an excess contribution transaction requests are genuine. You may be
may be treated as a Non-Qualified Distribution. The responsible for losses resulting from fraudulent
risk of market loss, tax implications and any other or unauthorized instructions received by us,
expenses as a result of such a refund will be solely provided we reasonably believe the instructions
your responsibility. were genuine. To safeguard your Account, please
keep your information confidential. Contact us
Failed Contributions immediately at 1-844-529-5845 if you believe
there is a discrepancy between a transaction
If you make a contribution by check, EFT, or AIP
you requested and the confirmation or quarterly
that is returned unpaid by the bank upon which it
statement you received, or if you believe someone
is drawn, you will be responsible for any losses or
has obtained unauthorized access to your Account.
expenses incurred by the Portfolios or DreamAhead
We may refuse contributions if they appear to be an
and we will charge your returned contribution a
abuse of DreamAhead.
fee of $25. DreamAhead has the right to reverse
any contribution previously credited due to
nonpayment.
dre a m a h e a d . wa. g ov | 13My Account
Maintaining My Account
At a Glance Options for Unused Contributions:
In this section, you will learn more about Changing a Beneficiary, Transferring
Assets to Another of Your Accounts
▸ Account Statements
Your Beneficiary may choose not to attend an
▸ Changing Beneficiaries Eligible Educational Institution or K-12 School or
may not use all the money in your Account for
▸ Changing Investments Qualified Expenses. In either case, you may name
a new Beneficiary or take a distribution of your
▸ Changing Account Owners
Account assets. Any Non-Qualified Distribution
from your Account will be subject to applicable
Account Statements income taxes and the Distribution Tax. In addition,
certain Other Distributions may be subject to
You may choose to receive electronic statements
applicable income taxes. Please see Using My
or paper statements. You will receive quarterly
Account beginning on page 17.
and annual statements. Quarterly statements will
include:
You can change your Beneficiary at any time.
• contributions to your Account; To avoid negative tax consequences, the new
• exchanges within your Account; Beneficiary must be a Member of the Family of the
original Beneficiary. Any change of the Beneficiary
• withdrawals made from your Account;
to a person who is not a Member of the Family of
• transaction and maintenance fees you the current Beneficiary is treated as a Non-Qualified
incurred; Distribution subject to applicable federal and state
• market performance; and income taxes and the Distribution Tax. An Account
Owner who is an UGMA/UTMA custodian will not
• the total value of your Account at quarter end.
be able to change the Beneficiary of the Account,
except as may be permitted under the applicable
If you receive your statements electronically, we will
UGMA/UTMA law. Please see Opening My Account
email you a notice that your statement is available
— Moving Assets from an UGMA/UTMA (Uniform
with instructions on how to retrieve it. If you
Gifts to Minors Act/Uniform Transfers to Minors
choose to receive your statements in paper form, an
Act) Account, beginning on page 10.
annual fee of $10 will be charged to your Account.
To initiate a change of Beneficiary, you must
Your Account statement is not a tax document
complete and submit a Change Beneficiary Form
and you should not submit it with your tax forms.
(and an Enrollment Form if you do not already have
However, you could use the Account statement(s)
an Account for the new Beneficiary). We will make
to determine how much you paid or contributed
the change upon our receipt and acceptance of the
during the previous tax year.
signed, properly completed form(s) in good order.
We reserve the right to suspend the processing of a
You may request duplicate copies of Account
Beneficiary transfer if we suspect that the transfer
statements to be provided to another party. Your
is intended to avoid DreamAhead’s exchange
statements are also available online at www.
and reallocation limits and/or tax laws. Also, a
dreamahead.wa.gov/ for a period of at least
Beneficiary change or transfer of assets may be
eighteen (18) months.
denied or limited if it causes one or more Accounts
to exceed the Maximum Account Balance limit
for a Beneficiary. There is no fee for changing a
Beneficiary.
dre a m a h e a d. wa. g ov | 14We will invest your assets in accordance with see Opening My Account — Moving Assets from
your chosen allocation for the new Beneficiary’s an UGMA/UTMA (Uniform Gifts to Minors
Account. This change may result in a loss in the Act/Uniform Transfers to Minors Act) Account,
value of your Account depending on market beginning on page 10.
fluctuations during the time of the change. You
can also transfer assets in the Account to a new Recovery of Incorrect Amounts
Portfolio(s) when you change the Beneficiary for
If an incorrect amount is paid to or on behalf of you
the Account.
or your Beneficiary, we have the right to recover
this amount from you or your Beneficiary, and to
Changing Investment Strategy adjust any remaining balances to correct the error.
You can change the investment strategy for each The processing of adjustments resulting from
Beneficiary – i.e., make an exchange of existing clerical errors or other causes that are de minimis
Account assets among Portfolios — up to two (insignificant) in amount can be waived at our
times per calendar year without changing the discretion.
Beneficiary. You can initiate this transaction online
or by downloading a form from our website at Correcting Errors
www.dreamahead.wa.gov/.
There is a 60-day period for making corrections.
If, within 60 calendar days after issuance of any
Because you may make no more than two
Quarterly Account statement you make no written
exchanges per year per Account, it is important
objection to us regarding an error in the Account
that you select a Portfolio(s) that will meet
that is reflected on that statement, the statement
your comfort level for risk in a variety of
will be deemed correct and binding upon you and
market conditions, while also considering your
your Beneficiary. If you do not write us to object
investment time horizon.
to a statement within that time period, you will
be considered to have approved it and to have
Change of Account Owner released the Program Administrators from all
Subject to the limitations included in this responsibility for matters covered by the statement
Program Details Booklet, you may transfer or confirmation. Each Account Owner agrees to
ownership of your Account to a new Account provide all information that we need to comply
Owner. All transfers to a new Account Owner with any legal reporting requirements.
must be requested in writing and include any
information that may be required by us. However, Disclosure Relating to Internet Access
ownership or control of your Account may not be
You have the option to perform Account-related
sold, transferred, used as collateral, or pledged
transactions and activity electronically via the
or exchanged for money or anything of value.
Internet. You can securely access and manage
We may require affidavits or other evidence to
Account information — including quarterly
establish that a change in ownership or control of
statements and tax forms — virtually 24 hours a
your Account is valid, is non-financial in nature
day at www.dreamahead.wa.gov/ once you have
or for any other reason. Ownership or control
created an online username and password.
of your Account may also be transferred under
an appropriate court order, such as pursuant to
If you choose to open an Account electronically or
divorce proceedings; or by operation of law such
register for online access to an existing Account,
as a will. In all cases, the new Account Owner is,
you can also choose to access documents relating to
and must agree to be, bound by the terms and
your Account via our website.
conditions of the Program Details Booklet and
Enrollment Form. Transferring an Account to
Please note that if you elect to receive documents
a new Account Owner may have significant tax
electronically, the only way to get paper copies
consequences. Before doing so, you should check
of these documents will be to print them from
with your tax advisor regarding your particular
a computer. You should not elect to conduct
situation. For information about changing the
transactions electronically if you do not have
Custodian of an UGMA/UTMA Account, please
regular and continuous Internet access.
dre a m a h e a d. wa. g ov | 15The information concerning the Portfolios may We cannot guarantee the privacy or reliability of
be available on our website. We expect to post on email, so we will not honor requests for transfers
our website any updated information concerning or changes received by email, nor will we send
the Portfolios and Underlying Funds as well as Account information through email. All transfers
updates to the Program Details Booklet at least or changes made electronically should be made
annually. These materials and information also through our secure website. Our website uses
may be supplemented throughout the year. We generally accepted and available encryption
will make any supplements available on our software and protocols, including Transport Layer
website. We may archive documents and cease Security. This is to prevent unauthorized people
providing them on the website when they become from eavesdropping or intercepting information
out-of-date. sent by or received by us. This may require that
you use certain readily available versions of web
You should consider printing any information browsers. As new security software or other
posted on our website before it is removed. If you technology becomes available, we may enhance our
have elected electronic delivery, we may, from systems.
time to time, notify you by email that documents,
including Account statements, have been
delivered. However, email notification is not a
substitute for regularly checking your Account at
www.dreamahead.wa.gov/. We intend to archive
the transaction history for Accounts after a rolling
48-month period, and Account statements after a
rolling 18-month period, after which they may not
be available through our website. Accordingly, you
should print any Account information before we
remove it. After we archive these documents, you
will be able to obtain a copy for a fee by contacting
a Customer Service Representative at 1-844-529
5845.
You will be required to provide your username
and password to access your Account information
and perform transactions on our website. Keep
your password private. We will honor instructions
from any person who provides correct identifying
information, and we are not responsible for
fraudulent transactions we believe to be genuine
according to these procedures. Accordingly, you
bear the risk of loss if unauthorized persons
obtain your username and password and conduct
any transactions on your Account. You can reduce
this risk by checking your Account information
regularly. You should avoid using passwords that
can be guessed and should change your password
frequently. For security purposes, our Customer
Service Representatives will not ask you for your
password. It is your responsibility to review your
Account information and to notify us promptly
of any unusual activity. You can withdraw your
consent to receiving documents electronically
at any time by contacting a Customer Service
Representative at 1-844-529-5845 or by making the
change online.
dre a m a h e a d . wa. g ov | 16My Account
Using My Account
• Beneficiary by check or by Electronic
At a Glance
Funds Transfer (EFT) using the Automated
In this section, you will learn more about
Clearing House (ACH) to an established
▸ How to use your Account bank account; or
• Eligible Educational Institution by check.
▸ Qualified Distributions
▸ Non-Qualified Distributions Timing of Distribution Request
We process distribution requests received
in good order before the close of the NYSE
General
(generally 1 p.m., Pacific Time) on a Business
You can request a distribution from your Account Day based on the Unit Values of the Portfolios
online or by mail. You can close your Account underlying the Account for that day. We process
at any time by submitting appropriate forms by requests received in good order after the close of
mail. Distributions from your Account are either the NYSE using the Unit Values of the Portfolios
Qualified Distributions, Non-Qualified Distributions underlying the Account for the next Business
or Other Distributions as determined under IRS Day.
requirements. As the Account Owner, you are
responsible for satisfying the IRS requirements for Procedures for Distributions
proof of Qualified Distributions, which includes
retaining any paperwork and receipts necessary to Only you, as the Account Owner may direct
verify the type of distribution you received. We will distributions from your Account. Qualified
not provide information to the IRS regarding the Distributions are made payable to the
type of distribution you Account Owner, the Beneficiary, or an Eligible
receive. Educational Institution; and may be requested
A distribution
online. You may also call a Customer Service
from your Account Representative at 1-844-529-5845 to receive
Distributions may be can be made
subject to federal and/or a Withdrawal Form or download the form on
payable to you, our website at www.dreamahead.wa.gov/.
state tax withholding. For
your Beneficiary Complete and submit the form to us in good
purposes of determining
whether a distribution is or the Eligible order and provide such other information or
taxable or subject to the Educational documentation as we may require from time to
Distribution Tax, you must Institution. time.
determine whether the
distribution is made in connection with the payment We will generally process a distribution from
of Qualified Expenses, as defined under the Code an Account within three (3) Business Days
and discussed under Qualified Distributions below of accepting the request. During periods of
or fits within one of the exceptions to treatment as a market volatility and at year-end, distribution
Non-Qualified Distribution as discussed under Other requests may take up to five (5) Business Days
Distributions on page 18 below. to process. Please allow ten (10) Business Days
for the proceeds to reach you. We charge a Fee
for distributions made by federal wire or by
Method of Payment
overnight express mail.
We pay distributions to the following payees:
• Account Owner by check or by Electronic Qualified Distributions
Funds Transfer (EFT) using the Automated Distributions for Qualified Expenses are
Clearing House (ACH) to an established bank generally exempt from federal income taxes and
account; the Distribution Tax.
dre a m a h e a d. wa. g ov | 17Non-Qualified Distributions • Death of Beneficiary. In the event of the
death of the Beneficiary, you may change
A distribution that does not meet the requirements
the Beneficiary of your Account, authorize a
for a Qualified Distribution or Other Distribution
payment to a beneficiary of the Beneficiary,
will be considered a Non-Qualified Distribution by
or the estate of the Beneficiary, or request
the IRS. The earnings portion of a Non-Qualified
the return of all or a portion of your Account
Distribution will be subject to federal income taxes
balance. A distribution due to the death of
(and may be subject to other taxes) and will be
the Beneficiary, if paid to a beneficiary of the
taxable to the person receiving the distribution.
Beneficiary or the estate of the Beneficiary,
In addition, Non-Qualified Distributions are
will not be subject to the Distribution Tax
subject to a Distribution Tax. The person receiving
but earnings will be subject to federal and
the distribution would need to comply with
any applicable state income tax. If not paid
IRS requirements, including filing applicable
to a beneficiary of the Beneficiary or the
forms with the IRS. Although we will report the
Beneficiary’s estate, the distribution may
earnings portion of all distributions, it is your
constitute a Non-Qualified Distribution,
final responsibility to calculate and report any tax
subject to federal and applicable state
liability and to substantiate any exemption from tax
income taxes at the distributee’s tax rate
and/or penalty.
and the Distribution Tax. If you select a new
Beneficiary who is a Member of the Family
Temporary Withdrawal Restriction of the former Beneficiary, you will not owe
If you make a contribution by check, EFT, or AIP federal income tax or the Distribution Tax.
(assuming all are in good order), we will defer the Special rules apply to UGMA/UTMA custodial
approval of a distribution of that contribution accounts.
from your Account for ten (10) Business Days after • Disability of Beneficiary. If your Beneficiary
deposit. For all third parties and gifts, the hold becomes Disabled you may change the
period is twenty (20) Business Days. Please note Beneficiary of your Account or request the
that there will be a hold placed on distribution distribution of all or a portion of your Account
requests for thirty (30) calendar-days after any of balance. A distribution due to the Disability
the following occur: of the Beneficiary will not be subject to the
• you complete an initial enrollment in Distribution Tax, but earnings will be subject
DreamAhead; to federal and any applicable state income tax
• you change your banking information; or at your tax rate. If you select a new Beneficiary
who is a Member of the Family of the former
• you change your address. Beneficiary instead of taking a distribution,
you will not owe federal income tax or the
For assistance, please contact a Customer Service Distribution Tax. Special rules apply to
Representative at 1-844-529-5845 Monday - UGMA/UTMA custodial accounts.
Friday, 6 a.m. to 5 p.m. Pacific Time.
• Receipt of Scholarship. If your Beneficiary
receives a qualified scholarship, you may
Other Distributions withdraw Account assets up to the amount
The distributions discussed below are not subject of the scholarship without incurring the
to the Distribution Tax. Except for a Rollover Distribution Tax. A qualified scholarship
Distribution, a Refunded Distribution or an ABLE includes certain educational assistance
Rollover Distribution, the earnings portion of each allowances under federal law as well as
distribution discussed will be subject to federal certain payments for educational expenses
and to any applicable state income taxes. (Please (or attributable to attendance at certain
see Important Federal Tax Information— Transfers educational institutions) that are exempt
and Rollovers on page 56). You should consult a tax from federal income tax. The earnings portion
advisor regarding the application of federal and of a distribution due to a qualified scholarship
state tax laws if you take any of these distributions. is subject to federal and any applicable state
income tax at the distributee’s tax rate.
dre a m a h e a d . wa. g ov | 18You can also read
