Publications, Reports, Forms and
Other Helpful Information
We hope you find this resource page informative and helpful as you pursue your higher education goals.
FAME is committed to helping Maine residents obtain access to postsecondary education by providing free information on how to plan and pay for college, career preparation and financial education, including responsible borrowing. Please also visit our Web site to learn more about access to innovative financial solutions to help Maine citizens pursue business opportunities.
The following information is an overview of the NextGen withdrawal process. Consult the NextGen Program Description for complete information about withdrawals and tax reporting.
Withdrawals Generally
Generally, only the account owner (Participant) can initiate a withdrawal from a NextGen account. All requests for withdrawals must be submitted on the NextGen Client Direct Series Withdrawal Request Form. Your NextGen Account Statement will contain the information needed to complete the Withdrawal Request Form, such as portfolio names and current holdings.
Withdrawal of Matching Grant Fund Assets
To withdraw matching grant assets for qualified higher education expenses,* the Participant must complete a Matching Grant Withdrawal and Certification Form for Maine Resident Accounts and submit it with the NextGen Withdrawal Request Form.
*To be eligible for the favorable tax treatment afforded to any earnings portion of withdrawals from Section 529 accounts, withdrawals must be for “qualified higher education expenses,” as defined in the Internal Revenue Code. Any earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% additional federal tax, as well as state and local income taxes.
Withdrawal Request Processing
Once the Withdrawal Request Form is received by the Program Manager, it can take up to five business days to process. If you have any questions, please contact a FAME NextGen Representative for assistance.
Verbal Distributions
Participants can authorize the Program Manager to distribute funds from their NextGen account(s) over the phone at 877.4.NEXTGEN (877.463.9843) via check or wire transfer. All NextGen distribution and trade settlement guidelines still apply. For more information...
The following information is an overview of the IRS Form 1099-Q tax reporting process. Consult the NextGen Program Description for complete information about withdrawals and tax reporting. Additionally, see your tax advisor regarding the impact of any distributions and what information, if any, must be reported.
IRS Form 1099-Q Reporting
The NextGen plan is required to produce IRS Form 1099-Q "Qualified Tuition Program Payments (Under Sections 529 and 530)" in the name of the "distributee." The amount of the gross distribution is reported in Box 1, the earnings portion of the distribution is reported in Box 2 and the basis portion of the distribution is reported in Box 3.
Distributee
IRS Form 1099-Q will be reported to the account beneficiary if the withdrawal was made directly to the beneficiary or to an eligible institution of higher education for the benefit of the beneficiary. Otherwise, the IRS Form 1099-Q will be sent to the Participant.
Qualified Withdrawals
Any portion of a withdrawal representing the amount contributed to a qualified tuition program or an amount paid for qualified higher education expenses* does not have to be reported as income on IRS tax forms.
Non-qualified Withdrawals
If a withdrawal is used for anything other than qualified higher education expenses,* any earnings portion of a nonqualified withdrawal is subject to federal and applicable state income tax and, in most cases, a 10% additional federal tax on earnings.
*To be eligible for the favorable tax treatment afforded to any earnings portion of withdrawals from Section 529 accounts, withdrawals must be for “qualified higher education expenses,” as defined in the Internal Revenue Code. Any earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% additional federal tax, as well as state and local income taxes.
Negative Earnings
Account owners who experience a loss on investment in the NextGen plan may be entitled to claim the loss on their income tax return, but only when all amounts from the account have been distributed and the total distributions are less than the unrecovered basis (contributions).
The NextGen plan reports negative earnings to account owners on IRS Form 1099-Q. Taxpayers claim the loss as a miscellaneous itemized deduction on line 22 of Schedule A (IRS Form 1040), subject to the 2%-of-adjusted-gross-income limit.
For more information please contact a FAME NextGen Representative or call 800.228.3734.
Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state or local tax penalties. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional advisors.