In order to open an account with the CHET program, applicants must be legal U.S. citizens or resident aliens who have valid Social Security numbers or federal taxpayer identification numbers.
Eligible applicants can open a CHET account for any beneficiary, as long as that beneficiary is also a U.S. resident or legal resident alien with a Social Security number or taxpayer ID number. Applicants can also open an account for themselves. Each account can have only one owner and one beneficiary, but owners and beneficiaries can have more than one account.
A minimum deposit of $25 is required to open the account; there are no other fees for opening an account. Open an account online or request materials and information from the CHET website.
After the initial contribution to open the CHET account, each contribution must be at least $15. Some companies offer direct payroll deduction into CHET accounts. There is no maximum amount of money you can contribute each year, but the highest total balance available for a CHET account is $300,000.
The CHET program itself offers eight different investment options; account owners can invest through one or a combination of these options throughout the life of the account.
Owners can access the details of the CHET account through the website at any time, or by contacting CHET's customer service. The CHET program also provides quarterly and annual statements that show all account activity.
Funds from the CHET account can be used for "qualified higher education expenses." These expenses include tuition, fees, supplies and equipment required for the beneficiary to enroll in or attend an educational institution. Some beneficiaries may use the funds for room and board; this is determined on a case-by-case basis. Repayment of previous student loans is not a qualified expense.
Qualified educational institutions are generally postsecondary institutions that offer credits toward bachelor's degrees, associate degrees or graduate-level degrees; some exceptions include special schools for students with disabilities. The money from CHET does not need to be used in the state of Connecticut or within the United States, as long as the institution is qualified.
If the beneficiary does not attend college, the account can be transferred to a family member of the beneficiary. If the funds are withdrawn from the account for any purpose other than qualified educational expenses, there is a 10 percent federal tax applied. This is only waived in the event of a beneficiary's death, disability to attend college (extreme physical or mental disability as a result of an accident, for example), or attendance at a military academy.