Our first product is connected to college savings accounts called 529 plans. IRS rules state that the 529 plans will grow tax free and withdrawals are tax free if used for higher education expenses such as tuition, room, board, textbooks and school supplies. Our prepaid card, called 529easy, will help with the distribution of the 529 plans. We streamline the distribution process and add a restricted loop that will work only with merchants that sell products for higher education.Current withdrawal process: Any withdrawal is considered a distribution and must be used for higher education expenses within the calendar year, otherwise taxes and penalties may occur. Financial Institutions deliver a 1099Q annually with the annual amount withdrawn. If IRS audits the account owner, who is typically the parent or grandparent, they must prove the monies were used for higher education expenses.
Our partnership with Financial Institutions: We partner with Financial Institutions that run 529 programs for state agencies. They will market 529easy to their clientele. Our technology will integrate with the Financial Institution to allow purchases to be made on the 529easy card, trigger a trade in the account and reconcile the negative float with our Issuer Bank. This process will lower the administrative costs of the Financial Institutions. We will also share net revenue with the Financial Institution to help pay for technology changes and marketing campaigns.