Navigating CollegeInvest Colorado: A Comprehensive Overview

CollegeInvest is dedicated to helping Colorado families save for higher education. By providing accessible, affordable options for saving and investing in education, they empower you to achieve your educational goals without financial barriers. Colorado’s 529 College Savings Program allows you to use tax-advantaged college savings plans to save for higher education expenses for your children, grandchildren or even yourself. This article delves into the various facets of CollegeInvest, focusing on the First Step Program and investment portfolio options.

CollegeInvest First Step Program

The CollegeInvest First Step Program is designed to encourage early savings for higher education by providing financial incentives for children born or adopted in the State of Colorado on or after January 1, 2020. Participation in the program is free, and a CollegeInvest 529 plan can be opened with a $0 initial contribution. Furthermore, parents and legal guardians who enroll are eligible for a significant matching incentive.

Key Features and Benefits

Free Enrollment: Participation in the First Step Program is entirely free.
$0 Initial Contribution: A CollegeInvest 529 plan can be opened with no initial deposit.
Matching Incentive: CollegeInvest will match $500 of your savings per year for five years, totaling up to $2,500 in additional gift contributions.
Tax Advantages: While the initial gift and matching funds are not eligible for the Colorado state income tax deduction, any subsequent contributions made to the 529 account can be deducted.
Family Contributions: Grandparents and other family members can now also claim the $118 initial gift for an eligible child, but only the child’s parent or legal guardian is eligible for the $2,500 matching incentive.

Changes to the Matching Period

Currently, parents and legal guardians are eligible for a five-year match of $500 per year, which totals up to a generous $2,500. However, this is set to be reduced. Starting in January, the matching period will decrease to three years.

Eligibility Criteria

Birth Year: The child must have been born in 2020 or later.
Adoption: Critically, for families who have adopted, any adoption completed since 2020 makes the child eligible for the program and the match, regardless of the child’s current age.
Residency: The child does not need to currently live in Colorado if they were born or adopted in the state.

Application Process for Adopted Children

If you are interested in applying for an adopted child, please contact Mike Keglovits. There is a special process for adopted children and Mike will be able to guide you through the easy process.

CollegeInvest Investment Portfolio

The Portfolio invests in three Vanguard® bond funds and one Vanguard® short-term reserves fund according to a formula that results in an allocation of 75% of assets to investment-grade bonds and 25% of assets to short-term investments.

Vanguard Total Bond Market Index Fund ETF

The Fund employs an indexing investment approach designed to track the performance of the Bloomberg U.S. Aggregate Float Adjusted Index in terms of key risk factors and other characteristics. The Index represents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States-including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities-all with maturities of more than 1 year. The Fund invests by sampling the Index.

Vanguard Total International Bond Index Fund ETF

The Fund employs an indexing investment approach designed to track the performance of the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged), which provides a broad-based measure of the global, investment-grade, fixed-rate debt markets. dollar hedged. dollar. The Fund maintains a dollar-weighted average maturity consistent with that of the Index, which generally ranges between 5 and 10 years. The Fund may become nondiversified, as defined under the Investment Company Act of 1940, solely as a result of an index rebalance or market movement. The Fund invests by sampling the Index, meaning that it holds a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics.

Vanguard Short-Term Inflation-Protected Securities ETF

Treasury with remaining maturities of less than 5 years. 0-5 Year Treasury Inflation-Protected Securities (TIPS) Index, which is market-capitalization weighted. The Fund attempts to replicate the Index by investing all, or substantially all, of its assets in the securities that make up the Index, holding each security in approximately the same proportion as its weighting in the Index. The Fund maintains a dollar-weighted average maturity consistent with that of the target index, which generally does not exceed 3 years.

Colorado Short-Term Reserves Account

Through its investment in Colorado Short-Term Reserves Account, the Portfolio indirectly invests in funding agreements issued by one or more insurance companies, synthetic investment contracts (SICs), and shares of Vanguard Federal Money Market Fund. Funding agreements and SICs are interest-bearing contracts that are structured to preserve principal and accumulate interest earnings over the life of the investment. Funding agreements generally pay interest at a fixed rate and have fixed maturity dates that normally range from 2 to 5 years. SICs pay a variable interest rate and have an average duration range between 2 and 5 years. government and its agencies and instrumentalities. For more information about Colorado Short-Term Reserves Account, please see the Interest Accumulation Portfolio profile.

Note: Colorado Short-Term Reserves Account’s investments in Vanguard Federal Money Market Fund are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although Vanguard Federal Money Market Fund seeks to preserve the value of the investment at $1 per share, it is possible that Colorado Short-Term Reserves Account may lose money by investing in the Fund.

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