Select a category below to find a list of the most frequently asked questions. Simply select the question and the answer will display.

General Questions

         Why am I receiving a pop-up survey from ForeSee Results?

American Century Investments® is offering an online survey from a leader in Web site customer satisfaction management.

We have engaged ForeSeeTM Results to help us find out what you think we're doing well and what we can do to improve americancentury.com. As a result, you may be presented with a pop-up survey invitation a few times a year when you visit our site.

The survey should take between three and five minutes to complete and all responses will remain anonymous and confidential. No personal information about you will be reported to us. As a client, your candid feedback is one of the most important tools we have in measuring the success of our Web site and the results of this survey will be a significant part of the process we use for considering future site enhancements.

         How can I access my accounts online?

Learn more by visiting the following site help topic:

         Now that I have online access to my accounts, which account transactions can I perform online?

Investments*, Automatic Investments*, Exchanges and Redemptions*.

*In order to process these account transactions, you must have bank information on file for these accounts, which you can add online after you Log In. Learn more by visiting the following site help topics:

         What do I do if I forgot my User Name, Password or answers to my challenge questions?

Review our help topic for more information.

         How can I redeem from my IRA Beneficiary account, CESA account or other tax-deferred account (403b, SEP, SARSEP, etc.) online?

Please contact us by telephone for redemptions from CESA accounts, IRA Beneficiary accounts and tax-deferred workplace retirement plan accounts, such as 403b, SEP, SARSEP, etc.

         Can I link my other family members' accounts to my account to view online?

A family member's account can be linked to your account through our grant access feature.

- Review this help topic for more information.

         I moved recently and I'd like to update my mailing address of record for my accounts. Where do I go to change my address and perform other account maintenance tasks?
Learn more by visiting the following site help topic:
         How do I add/remove my banking information online?

Learn more by visiting the following site help topics:

         Where can I download account maintenance forms on your site?

There are many forms available for download in our Form Center.

         How do I register for online access to my Giftrust account?

Help Topic:  - View the steps to register an Giftrust® account on americancentury.com.

Note: In order to access your Giftrust account online, you must have:

  • The employer identification number (EIN) that is assigned by American Century Investments
  • Account number for the Giftrust

If you do not have the EIN or account number, please contact us.

         How do I view my Giftrust account online after it has matured?

When your Giftrust account matures, it is transferred out of the trust and into an individual account under your Social Security number. A new Giftrust account number is also assigned. In order to view this account online, you must register for online access using your Social Security number and new Giftrust account number. Learn how to register.

If you do not have your Giftrust account number, please contact us.

         I received a postcard stating that my email address on file with American Century Investments may be incorrect. How can I verify or update my email address online?

To verify or update your email address anytime on americancentury.com, please:

View steps to update your email address.

         What if my email address is correct on the postcard and online after I Log In?

Due to the variety of problems, there may be instances when email delivery is unsuccessful.1 These instances may include:

  • If you have multiple email addresses on file, there may be an old and invalid email address listed
  • Typos in your email address
  • You made changes to your email address that didn't go into effect before we mailed the postcard
  • If you manage accounts under a different Tax Identification Number, those accounts may have invalid email addresses (See note in previous FAQ)
  • Network problems with your ISP (Internet Service Provider)
  • Your in-box is full or not accepting email
  • Network problems impacting the Internet
  • Use of Spam Filters by your ISP or email application settings

1Important note to investors enrolled in exclusive online account management: As stated in the agreement, this option will be removed from your account after three failed delivery attempts to your email address of record. Once this option is removed from your account, we can no longer waive the $12.50 semiannual account maintenance fee.

         How do the recent distributions on a number of American Century Investments' funds affect my accounts?

Federal law requires mutual funds to distribute their realized capital gains and income to investors at least once a year. Your distribution purchases additional shares if you reinvest them, and the share price will adjust down by the amount per share of the capital gain and/or income distribution. If you elect to have your distributions paid in cash, then the distribution will be sent to you.

You are required to pay income tax on any distribution in the tax year you receive it, unless your investments are in a tax-deferred account, such as an IRA.

To learn more about distributions and taxes, visit our tax center.

         How do I obtain a Personal Access Code (PAC) for TurboTax, Quicken, H&R Block At Home or the automated phone system?

View or Change Your PAC Online:

  1. Log In with your User Name and Password (register here).
  2. Select Update My Information in the margin.
  3. Select View or Change PAC.
  4. To modify your PAC, select the Modify link next to the PAC.
  5. Enter and re-enter the new PAC.
  6. Select the Modify button.
         Why does my bank charge me a fee when I send funds to my domestic bank via Automated Clearing House (ACH)?

Your bank may charge you for ACH transactions coded as International ACH Transactions (IAT) in accordance with U.S. laws.  ACH transactions are required to be coded as IAT when you maintain a foreign address on file.


Tax Questions


Individual Retirement Account Questions

         What do I do if I have contributed too much to my IRA for the year?

You have some options available if you have contributed more than the maximum allowed for the tax year. These include applying the amount to the following tax year or removing the excess amount. You may also be able to recharacterize a Roth IRA. We recommend that you work with your tax advisor to determine which option is best for you because they can involve tax penalties. For more specific details, please see information about Excess Contributions in the Disclosure Statement and Custodial Agreement PDF booklet, or visit www.irs.gov Link to External Site.
         Which is better, contributing to my 401(k) or to an IRA?

It's hard to beat a 401(k) that includes matching contributions from your employer. And a 401(k) often includes other attractive features, such as the ability to borrow from the plan and the convenience of having your contributions directly invested from your paycheck. But the Roth IRA also has attractive features, such as tax-free earnings, no required distributions at age 70½ and penalty-free withdrawals for certain qualified expenses. Plus all IRAs provide many more investment choices than are offered by 401(k) plans. If you can't invest in both, carefully weigh the pros and cons of each before making your choice.

         Can I be penalized for withdrawing too much money from my IRA?

No. Recent legislation repealed the "excess-distribution" penalties on amounts above $160,000.

         Can I contribute to a Traditional IRA and a Roth IRA in the same tax year?

Yes, as long as your total annual IRA contributions do not exceed contribution limits.
         Why is the tax-free IRA called a "Roth" IRA?

The Roth IRA was named after Senator William Roth, R-Del., chairman of the Senate Finance Committee.

         Should I convert my traditional IRA over to a Roth IRA?

That's a difficult question, and one you should review thoroughly with your tax advisor. The answer depends on several things, including how far away you are from retiring, how much untaxed earnings and contributions you have in your traditional IRA and how soon you want to start withdrawing money from your IRA. If you convert money over to a Roth IRA, there is no 10% penalty, but you owe taxes on any contributions and earnings not previously taxed. However, there are no minimum distribution requirements for Roth IRAs, and you may contribute to a Roth IRA for as long as you want, provided you have compensation. For conversions that occur in 1999 and beyond, all taxes are due in the year the conversion is made. American Century IRA specialists can offer some assistance with this decision, and they can make the conversion process easy for you.

         What about rolling over my 401(k) investments to a Roth IRA?

Again, this is a complex issue that you should review with your tax advisor. This conversion offers tax advantages for some investors, and American Century's Rollover Specialists can assist you in making this a seamless transaction.

         Will withdrawals from a Roth IRA be subject to state and local taxes?

The answer is not clear. So far, only California has issued a position; the other states have not.

         How does the penalty-free withdrawal work if I'm purchasing a first home for my parent or child?

If you are the buyer, to qualify for a penalty-free withdrawal, you cannot have owned a home for the previous two years.

         I don't have any earnings. Can I still contribute to a Coverdell Education Savings Account?
Yes. Unlike retirement IRAs, contributions can be made into a Coverdell Education Savings Account from any income source.
         What about rolling over my 401(k) investments to a Rollover IRA?

If you leave your current employer or retire, you might consider a 401(k) Rollover. Our Rollover Specialists offer personalized guidance and assistance in helping you with this transition, and we offer a Rollover Service Guarantee PDF.

         Can I roll my company stock over to American Century Investments?

Depending on your retirement plan, you may be able to:

  • You can roll over your company stock directly to an American Century® Brokerage Rollover IRA without liquidating the assets; or
  • Instruct your employer to sell your stock and directly roll over the proceeds into an American Century Investments Rollover IRA; or
  • You can receive the stock certificates. You may then roll over the stock to an American Century Brokerage Rollover IRA or sell the stock and roll over the proceeds. You will not incur any income tax provided the rollover is completed within 60 days. You are not allowed to keep the stock and contribute the equivalent value in cash to a Rollover IRA.
         Can I invest in individual securities or non-American Century Investments mutual funds in my Rollover IRA?

An American Century® Brokerage Rollover IRA provides a broad range of investments, including a full range of listed and over-the-counter stocks and bonds and more than 9,000 no-load and load mutual funds from more than 500 fund families.

Review our Fees & Commissions for more information.


Brokerage Questions

         If I have an American Century Investments mutual fund account, can I use your brokerage services?

Yes. However, you must first open a separate account with American Century Brokerage. You can open an account online or download an account kit from our Form Center or you can call 1-888-345-2071 to order a kit. The kit contains complete information about features and benefits, account minimums, commissions and fees, and a brokerage account application and customer agreement.

         Why do I have to fill out a new application when I already have mutual fund accounts with American Century Investments?

The laws and regulations that govern brokerage companies and mutual fund companies are different. According to the regulations governing brokerage companies, we are required to obtain financial and employment information from brokerage customers. We also are required to have your original signature on a brokerage application form.

         What types of accounts are available with American Century Brokerage?

In addition to the Standard Account, we offer the Corestone AccountTM and IRA Account.

See all of our available Brokerage Account Types.

         What options are available for my cash balances?

Cash balances are kept in a money market sweep account.

         How can I trade with American Century Brokerage?

You can place stock, option and mutual fund trades in any of the following ways:

  • Online at americancentury.com
  • Using TeleSelect, our automated information and trading line at 1-888-345-2091

Quotes and account information also are available:

  • By telephone with a Brokerage Investment Specialist Monday - Friday, 8 a.m. to 6 p.m. Central time toll-free at 1-888-345-2071
  • In person at any of our three Investor Centers.

Precious metals and fixed-income securities are not available for quotes or trading either online or using TeleSelect. Please contact us or visit an Investor Center to request a quote or place a trade in precious metals or fixed-income securities.

         Is there a more convenient way other than a bank wire for me to move money from my bank account to my brokerage account?

Yes. You may mail us a check for deposit to your brokerage account. Your deposits will be swept to your brokerage money market sweep fund where they will earn daily dividends until you use the money to pay for a trade or withdraw your cash. Call a client representative to find out more.

         Can you give me recommendations?

No. Brokerage Investment Specialists cannot provide recommendations about your investments. There are tools available on our Web site or through our Brokerage Investment Specialists to help you make your choices.

         How do I send a bank wire to American Century Brokerage?

You can send a bank wire by contacting the financial institution that will be wiring the assets to us. When requesting the wire you should instruct the financial institution to address the wire to:

The Bank of New York: ABA# 021000018
Pershing LLC Account Number: 890-051238-5
For Further Credit: Your name and American Century Brokerage account number

         How do I consolidate my portfolio from American Century Investments to American Century Brokerage?
There is a section on the brokerage application where you can elect to transfer your American Century Investments mutual funds directly to your brokerage account without liquidating your shares or incurring a taxable event. Certain funds are not available through our brokerage service. Call us for details.
         How do I transfer my account from an outside financial institution to American Century Brokerage?

You can transfer "in-kind" (without liquidating your shares or incurring a taxable event) many of the securities or mutual funds you own with other financial institutions. A Transfer Form is included for this purpose in the brokerage information kit. Additional Transfer Forms can be downloaded from our Form Center.

         Can I own non-American Century Investments mutual funds in my brokerage account?

Yes. The FundChoice ServiceSM offers most American Century Investments mutual funds, plus funds from thousands of no-load and load fund families. Over 1,000 no-load funds are available with no transaction fees, while over 3,000 no-load funds are available with a transaction fee. There are no transaction fees to buy and sell load funds, but the sales load does apply.

View our Fees & Commissions page for more information.

         Do I have to transfer all of my mutual fund accounts to my brokerage account?

No. You can still maintain a mutual fund account in addition to a brokerage account as long as the applicable investment minimums are met.

         Can I use my American Century Investments mutual fund assets to pay for a securities trade?

Once your brokerage account is open, you can move money from your American Century Investments´ mutual funds to your brokerage account. When the money is in your brokerage account, it may then be used to pay for a securities trade.

You can also elect to transfer your American Century Investments´ mutual funds directly to your brokerage account on your brokerage account application.

         How long will a Good-Til-Canceled (GTC) order remain as an open order?

A GTC order will remain as an open order for 90 days or until it executes, whichever occurs first. Please contact one of our Brokerage Investment Specialists if you would like to extend the expiration period of a GTC order.

         Can I buy IPOs through American Century Brokerage?

Initial Public Offerings (IPOs) are not available through American Century Brokerage at this time.

         Can I buy a stock and then send you a check in the mail?

No. In order to purchase stock or other securities in a brokerage account, sufficient funds (or, in the case of a margin account, marginable securities) must be in the account on the day the order is placed.

         Can I reinvest my stock or mutual fund dividends?

Yes. Most of the stocks and funds available through our brokerage service are available for dividend reinvestment. Please let one of our Brokerage Investment Specialists know if you would like any of your holdings set up for dividend reinvestment.

         How can I get research and information about stocks or mutual funds?
When you log in to your brokerage account, you'll have access to a wide range of online news and research, powered by Pershing. Among the many tools, you'll find the FundScanTM mutual fund screener.
         Where can I find a complete list of funds offered through American Century Brokerage?

You can find a complete list of the mutual fund families in the Fund Choices section. Or, look up a fund by requesting a mutual fund quote when logged in to your brokerage account. Once logged in, you also can use FundScanTM, an online mutual fund screening and sorting tool. FundScan can help you create a customized list of funds based on the criteria that you select.

         What are your commissions, margin rates and account fees?

Review our Fees & Commissions for trading stocks, bonds, options, mutual funds and precious metals. Please note that online trading is limited to stocks, options and mutual funds. Other securities and precious metals trades must be placed directly with one of our Brokerage Specialists at 1-888-345-2071. Fees and Commissions brochures are also included in our brokerage information kits.

         How are the precious metals in my account priced?

They are priced using the Comex spot bid as of the close on the last business day of the previous month.

         Will I need to pay any fees to transfer a mutual fund to American Century Brokerage?

No. We do not charge transaction fees or transfer fees when transferring your mutual funds. However, you may be subject to transfer fees by the financial institution from which you are transferring. If you do get charged a fee for transferring your assets to us, you can call a Brokerage Investment Specialist at 1-888-345-2071 to see if you are eligible for a rebate on all or a portion of the fee.

         If I set up automatic investments on a transaction fee fund, will I have to pay a transaction fee on each periodic purchase?

No. As long as you establish an Automatic Investing Plan and invest a minimum of $100 automatically into your mutual fund monthly, quarterly, semiannually or annually, you will not have to pay a transaction fee.


Rollover Questions

         What is a direct rollover?

When you choose a rollover, also known as a direct rollover, your money (also known as a distribution) goes to your new employer's retirement plan or a Rollover IRA. If your retirement distribution check is made payable to your new plan or a Rollover IRA on your behalf, no withholding taxes or penalties will occur.

If you have company stock as a part or all of your employer-sponsored retirement savings plan, you have two options:

Depending on your company plan, you may be able to transfer your company stock directly to an American Century Brokerage Rollover IRA without liquidating the assets.

You may also sell the stock and roll over the proceeds directly into a Rollover IRA. You will not incur an income tax liability provided the proceeds are rolled over within 60 days. However, you are not allowed to keep the stock and contribute the equivalent value in cash to a Rollover IRA.

         Is a Rollover IRA the same thing as a traditional IRA?

Not exactly, though your Rollover IRA will be very similar to your Traditional IRA. The primary differences are the source of the money in the account and your ability to transfer that money into a new employer's retirement plan. While you can almost always* combine your rollover assets with your existing IRA to create a single Traditional IRA account, this may limit your future ability to roll that combined account into a new employer's retirement plan.

*There may be special tax considerations or rollover limitations for older workers and for certain types of 457(b) plans. You should consult your financial adviser or tax professional before starting your rollover if you were born before 1936 or have assets in a 457(b) plan.

         Can I direct my retirement plan money into a Roth IRA?

If your previous employer offered a Roth 401(k) option as part of your retirement plan, you can roll any money you have in that account directly into a Rollover Roth IRA.

More likely, you will need to first transfer your retirement plan money directly into a Rollover IRA and then convert it to a Roth IRA. There are tax implications associated with this conversion, and you should consult your tax advisor.

         What are the age requirements for Rollover IRA withdrawals?

Like traditional IRAs, Rollover IRAs have both a minimum age for penalty-free withdrawals and an age at which you are required to take distributions from your account:

  • In general, you must wait until age 59½ to begin Rollover IRA withdrawals without penalty. Your employer's plan may not allow you to make withdrawals while you're still employed.
  • You must begin taking Required Minimum Distributions from a Rollover IRA beginning at age 70½. You will pay income taxes on these distributions.
         Will American Century Investments charge me for a Rollover IRA?

American Century Investments does not charge a fee for opening a Rollover IRA, or for providing a personalized investment plan.

If the total balance of all mutual fund accounts registered to your SSN are less than $10,000, there is a $12.50 account maintenance fee assessed twice a year.

         What's the difference between a direct and an indirect rollover?

A direct rollover transfers money directly from your previous employer's retirement plan into a Rollover IRA. Even though the distribution check may be mailed to you, it is made payable to the financial institution with which you plan to establish your Rollover IRA. Direct rollovers are considered preferable to indirect rollovers because you avoid penalties and taxes on your retirement money during the rollover process.

If the check is made payable to you, even though you plan on establishing a Rollover IRA, it is called an indirect rollover. Many things make this generally less preferable than a direct rollover:

  • Your former employer or plan sponsor must withhold 20% of your money as a prepayment of federal taxes, and may withhold more for state taxes.
  • When you do roll the money into a Rollover IRA, you will have to either make up the withheld 20% along with any withheld state taxes, or pay taxes on that amount.
  • Even if you make up the 20% withholding, an indirect rollover must be completed within 60 days.
         What is the difference between a Rollover IRA and Brokerage Rollover IRA?

Think of your Brokerage Rollover IRA as a Rollover IRA with more investment choices. With a Brokerage Rollover IRA you can choose from a wide array of load and no-load mutual funds from hundreds of fund companies as well as individual securities like stocks and bonds.

         I have company stock. Can I roll it over?

Depending on your retirement plan, you may be able to roll over company stock to an American Century Brokerage Rollover IRA through the following options:

  • You can roll over your company stock directly to an American Century Brokerage IRA without liquidating the assets; or
  • You can instruct your employer to sell your stock and directly roll over the proceeds into a Rollover IRA; or
  • You can receive the stock certificates. You may then roll over the stock to an American Century Brokerage Rollover IRA or sell the stock and roll over the proceeds. You will not incur any income tax provided the rollover is completed within 60 days. You are not allowed to keep the stock and contribute the equivalent value in cash to a Rollover IRA.
         What if I need some money now but want to roll over the rest? What can I do?

Your current plan administrator can help you request the amount you need. It will be sent directly to you as a plan distribution. This amount will be paid to you and will be subject to 20% federal withholding and early withdrawal penalties. You can then directly roll the rest of your account into a Rollover IRA.

         I already have a check that was made payable to me. What do I need to do to avoid losing more money to taxes and penalties?

If you have already taken your distribution from your employer-sponsored retirement plan, you have two options for reinvesting:

  • Invest the money into a Rollover IRA, or
  • Transfer it to your new employer's plan if allowed.

To avoid additional taxes and penalties, you must reinvest within 60 days of when you received the check.

The check you received was the net of your vested account balance less a 20 percent federal tax withholding. You can claim a credit for this withholding on your next income tax return and recover this amount. To do this, you must add money to the amount you reinvest to make up for the 20% withheld. As long as you reinvest your full, pre-penalty, vested account balance within 60 days, you will not owe penalties or taxes.

For example, a $10,000 retirement plan account will be distributed directly to you as an $8,000 check with $2,000 withheld by your plan administrator. If you reinvest $10,000 within 60 days, the $2,000 withholding will be credited back to you at tax time. If you are only able to invest $8,000, you will still be able to recover a portion of the withheld amount. Consult your tax advisor about recovery of distribution tax withholdings.

Remember, you will only owe taxes and penalties on the amount not reinvested into a retirement account within 60 days. If you decide not to reinvest any of the money for retirement or miss the 60-day reinvestment deadline, you could lose 45% or more of your money in taxes and penalties, so taking the cash distribution is probably not the best choice for your money.

         Your application asks for a contact at my previous employer. Where do I find this information?

There are several places you should be able to find this information:

  • Your last retirement account statement,
  • Your previous employer's Human Resources or Payroll department or
  • Within your retirement plan's Summary Plan Description (SPD). Most company retirement plans are required to have, and make available to retirement plan participants, an SPD that explains their retirement plan. The Human Resources or Payroll department can provide you with a copy. You also may be able to get this document online if you have Web access to your retirement account.
         I completed the American Century Investments application. What do I need to do now?
  • Contact your former employer and/or plan administrator and tell them you are doing a direct rollover of your retirement plan money to an American Century Investments IRA.
  • Complete any distribution forms required by your former employer. Be sure to ask your former employer for a benefits contact name and phone number for follow-up questions. The contact and phone number may be listed on your last investment statement.
  • Make sure your former employer or plan administrator writes your American Century Investments IRA account number on your distribution check and make it payable to:

    American Century Investments FBO: <Your full name>
         To whom should my rollover check be made payable?

Make it payable to:

  • American Century Investments FBO: <your full name>.

Also, ask your former employer or plan administrator to write your American Century Investments IRA account number on your distribution check.

         Where do I mail the check?

American Century Investments
Rollover Specialist
P.O. Box 419292
Kansas City, MO 64141-6292

         I just learned that my former employer's retirement plan is in a blackout period. What should I do?

A blackout period occurs when a plan is undergoing significant changes, such as a company merger or acquisition, a change in the plan's investment choices or a change in plan administrators. As a participant, you are prevented from conducting certain activities on your account until the blackout period is over. Although all vested money is still yours, you will only be able to access your money after the blackout period. American Century can help you by calling your previous employer while you are on the phone to determine next steps.

         My employer needs American Century Investments to sign my distribution paperwork. How do I get that done?

You will need to mail your paperwork to a Rollover Specialist:

American Century Investments
Rollover Specialist
P.O. Box 419292
Kansas City, MO 64141-6292

         I can't decide on a mutual fund. Can I just put this into a money market fund?

Yes. A money market is a good choice while you decide into which funds you'll ultimately invest. If you need help choosing, call one of our Investment Consultants today.

An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Yields will fluctuate, and although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund. Unlike most FDIC-insured CDs, a money market fund's yield and return will vary. Fund shares are not guaranteed by the U.S. Government.


College Savings Questions

         Do I still have time to invest if I'm getting a late start?

Absolutely. It is true that you'll have a better chance of reaching your college goal if you start investing early, but it's never too late to get started. Simply start investing as soon as you can. You can still take advantage of time with your investments.

         How do I invest for retirement and college at the same time?

Retirement and college are important goals, but it can be hard to find the money to invest toward both. Even small amounts can add up over time. Maybe you will find that you can invest a small amount each month in your retirement account and a college account. Or, if you receive a bonus from work or an income tax refund, you may be able to divide the amount and invest toward both of your goals.

         Which type of college account should I choose?

If you plan to open an account to use exclusively for college expenses, a 529 Plan may be your best choice. A 529 Plan offers many benefits, including withdrawals that are free of federal income tax and penalty if used to pay for qualified expenses.

You may want to consider a Coverdell Education Savings Account (CESA) if you also might use the investments for elementary or secondary school expenses. You can make tax-free withdrawals from a CESA for elementary, secondary or college expenses.

Distributions are tax-free, provided the funds are used for qualified expenses, such as room, board and tuition. Otherwise, the earnings could be taxed and subject to a 10% penalty.

         What if I want to open an account for college and other, unrelated expenses?

If you open an account under the Uniform Gifts/Transfers to Minors Act (UGMA/UTMA), the money in the account must be used for your child's benefit, whether for education or other expenses. The account will be registered in your child's name with you or another adult acting as custodian. Your child is the legal owner of the UGMA/UTMA investments and gains control of the account at a set age defined by your state (usually 18 or 21). You may want to consider whether this change of control meets your goals for your investment.

         Can I contribute to more than one type of account?

Yes. For example, contributions to a 529 Plan and a Coverdell Education Savings Account are allowed in the same year for the same student.

         Can I access the money in the short term if there's an emergency?

Yes, but you may owe taxes and/or penalties. Any 529 Plan withdrawals that are not used for qualified education expenses are subject to federal and state taxes and a 10% penalty tax. If you withdraw money from a Coverdell Education Savings Account for reasons other than to pay for qualified education expenses, the earnings will be taxed at your ordinary income tax rate, which may be as high as 35%.

         The UGMA/UTMA account does not feature tax-deferred earnings or tax-free withdrawals, so how is this type of account taxed?

Select the link below for more information:
         Where can I find information about account minimums, fees and taxes on different types of college investing accounts?

You can find these details and more here:

         Will I use the investments exclusively for college expenses?

If you plan to open an account to use exclusively for college expenses, a 529 Plan may be your best choice. A 529 Plan offers many benefits, including withdrawals that are free of federal income tax and penalty if used to pay for qualified college expenses.

You may want to consider a Coverdell Education Savings Account (CESA, formerly the Education IRA) if you also might use the investments for elementary or secondary school expenses. You can make tax-free withdrawals from a CESA for elementary, secondary or post-secondary (college) expenses.

The CESA has a low maximum contribution limit ($2,000 per year) compared to 529 Plans ($200,000-$325,000 lifetime limit). If you decide to invest in a CESA, you may want to consider supplementing it with a 529 Plan. You can contribute to both account types in the same year for your child, and you'll be able to invest more toward college and other education needs.

         Do I need an investment account that offers multipurpose uses?

You have a couple of options if you want to invest in an account for multipurpose uses.

If you open an account under the Uniform Gifts/Transfers to Minors Act (UGMA/UTMA), the money in the account must be used for your child's benefit, whether for education or other expenses. The account will be registered in your child's name with you or another adult acting as custodian. Your child is the legal owner of the UGMA/UTMA investments and gains control of the account at a set age defined by your state (usually 18 or 21).

If you want the investments to be available for miscellaneous expenses and you want to maintain control of the account, you may want to consider opening a regular, taxable account in your name. This option allows you the most freedom with your investments; however, you lose the tax benefits that the other account options offer.

         Should I use my traditional or Roth IRA for college expenses?

It's possible to use your traditional or Roth IRA investments for college expenses; however, this may not be the best option for you. Remember that investing for your retirement should be your primary goal when you open a traditional or Roth IRA.

IRA withdrawals for qualified college expenses are penalty free, but you will more than likely have taxes to pay. With a traditional IRA, you will be taxed on earnings and any deductible contributions that are part of your withdrawal. With a Roth IRA, you will be taxed on earnings unless you are age 59½ or older and the account is at least five years old.

Traditional and Roth IRAs allow you the benefit of investing for retirement and college in the same account. But you do not get to take advantage of the tax-free withdrawals offered by a 529 Plan and CESA or the tax benefits of UGMA/UTMA accounts, and you lose part of your retirement investments.

         Which investment account offers me the most tax benefits?

A 529 Plan offers you multiple tax-related benefits.

  • You do not have to pay income taxes each year on the earnings in your account.
  • When you make a withdrawal for qualified college expenses, you do not have to pay federal income tax on your earnings.
  • If you contribute to a 529 Plan offered by your state, you may be eligible for a tax deduction or other benefit on your state income taxes.

The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors. Non-qualified withdrawals are subject to federal and state income taxes and a 10% penalty.

Before investing, consider the investment objectives, risks, and charges and expenses associated with investing in 529 Plans. More information about 529 Plans is available in the issuer's official statement, and it should be read carefully before investing.

If you contribute to a CESA, you do not have to pay income taxes each year on earnings, and you also do not have to pay federal income tax when making a qualified withdrawal. However, contributions to a CESA are not tax deductible.

With a UGMA/UTMA account, a portion of the investment earnings may be exempt from federal income tax and the remainder may be taxed each year. Depending on the amount of earnings, some may be taxed at your child's tax rate and some at your rate. Contributions to a UGMA/UTMA account also are not tax deductible.

         Can I make an investment on behalf of a minor?

Yes. The Uniform Gifts to Minors Act and Uniform Transfers to Minors Act allow you to make a gift of securities (for example, mutual funds) to a minor. You may designate yourself or another adult as custodian to transact on behalf of the minor until he or she reaches the age of majority. The minor may not make investments.

         What is the difference between the Uniform Gifts to Minors Act and Uniform Transfers to Minors Act?

The Uniform Transfers to Minors Act expands the scope of the prior law, the Uniform Gifts to Minors Act. Most states have adopted the Uniform Transfers to Minors Act, which replaces the Uniform Gifts to Minors Act in those states. When you open the account, we will register it under whichever act is effective in the state of residence of the donor/grantor, custodian or minor.

         With a UGMA or UTMA account, who "owns" the account?

When the account is opened, the funds legally belong to the minor. The shares cannot be transferred into a trust or to any other person, including the custodian or a sibling, until the minor reaches the age of majority and chooses to transfer the shares himself or herself.

         What if the minor does not have a Social Security number?

The minor will need a Social Security number in order for you to open an account. If the child does not have one, contact your local Social Security Administration office. After you receive the minor's Social Security number, send a completed account application to us along with your investment check.

         What investments does American Century Investments offer for Uniform Gifts to Minors or Uniform Transfers to Minors accounts?

We offer a variety of mutual funds, including domestic and international stock funds, balanced funds, bond funds and money market funds. Please review the appropriate fund's prospectus before investing.

         Can there be more than one custodian on the account?

No. The acts allow only one custodian and one minor per account in most states*. The custodian should, however, designate a successor to act on the account in the event of his or her incapacity or death. To designate a successor, simply complete a Designation of Successor Custodian form. To receive this form by mail, please contact us. It is not necessary to return the form to us. Please keep it with your legal documents.

*Tennessee allows two custodians for UTMA accounts.

         What happens when the minor reaches the age of majority under the Act?

The act requires the custodian to transfer the shares to the minor. To do this, the custodian must send us written instructions and have his or her signature guaranteed if the account is more than $100,000. The custodian must sign with the word "custodian" following the signature. After the account has been transferred, the minor is then able to conduct any type of transaction.

         What is the minimum investment required to open a Uniform Gifts to Minors or Uniform Transfers to Minors account?

Most American Century Investments mutual funds require a $2,500 minimum initial investment. Please refer to the prospectus for specific UGMA and UTMA minimums.

         Are Uniform Gifts to Minors (UGMA) or Uniform Transfers to Minors (UTMA) accounts subject to any fees?

It depends on your total investment balance. American Century Investments charges a $12.50 semiannual account maintenance fee to certain personal mutual fund investors whose total eligible investments are less than $10,000, including UGMA/UTMA* accounts. Total investments are based on the sum of accounts listed under your Social Security number. For UGMA/UTMA accounts, the investment is listed under the minor's Social Security number. The assets will not be included in the custodian's total investment balance when we assess the account maintenance fee.

*Online access is not available for UGMA/UTMA accounts if the minor has multiple accounts with more than one custodian. This protects the privacy of each custodian's information online. As a result, UGMA/UTMA accounts for which the same minor has more than one custodian are not are not subject to the account maintenance fee.


IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

Brokerage Services are provided by American Century Brokerage, a division of American Century Investment Services, Inc., registered broker/dealer, member FINRA, SIPC.