How Our 529 Plan Works
No matter your child’s age, the best time to open a ScholarShare 529 is today. Because the sooner you start, the more you can take advantage of compound earnings and powerful tax benefits.
Start early to make the most of your savings
Saving early has the potential to deliver compound earnings over a longer period of time.
529 fact
529 factHelp grow your savings with gifts from friends and family using Ugift®.
Advantages of Starting Early
See how your savings might grow if you start with $5,000 and continue to save $100 a month for 8, 12 and 18 years.
- Earnings
- Subsequent Contributions
- Initial Contribution
Save for 8 years
- Earnings: 6% Annual Return
- Subsequent Contributions: $100 per month
- Initial Contribution: $5,000 Lump Sum
- Total savings growth over time: $20,559
Save for 12 years
- Earnings: 6% Annual Return
- Subsequent Contributions: $100 per month
- Initial Contribution: $5,000 Lump Sum
- Total savings growth over time: $31,520
Save for 18 years
- Earnings: 6% Annual Return
- Subsequent Contributions: $100 per month
- Initial Contribution: $5,000 Lump Sum
- Total savings growth over time: $53,584
Graph Footnotes
- This chart assumes a $5,000 lump sum investment, a $100 monthly investment and 6% annual rate of return compounded annually. The calculations are for illustrative purposes only, and the results are not indicative of the performance of any investments. The calculations do not reflect any plan fees or charges that may apply. If such fees or charges were taken into account, returns would have been lower. Such automatic investment plans do not assure a profit or protect against losses in declining markets. Account value in the investment options is not guaranteed and will fluctuate with market conditions.
How much should you save towards your child’s tuition?
Get a quick estimate of approximately how much you’ll need to save using our calculator tool.
Estimate your savings
Unique Tax Benefits
As a 529 Plan, ScholarShare 529 provides California families compelling income tax benefits.
Although contributions are not deductible on your federal tax return, any investment earnings can grow tax-deferred.
- Tax-deferred growth
Any earnings can grow 100% tax-deferred - Tax-free withdrawals
When used for qualified higher educational purposes
See the ScholarShare 529 Plan Description for more details on California’s tax benefits.
Who’s Eligible?
ScholarShare 529 eligibility requirements are very straightforward, which allows you to save for yourself, friends, family or others. Find out more details here.
Account owners
- At least 18 years old with a valid Social Security Number (SSN) or taxpayer ID number
- Person opening the account can designate a successor account owner in the event of their death
- Certain trusts, estates, and corporations can also open an account with a valid taxpayer ID number*
Account Owner Footnote
- *Additional restrictions may apply; please refer to the Plan Description for details.↩
Beneficiaries
- The beneficiary is the student and only needs a valid SSN or taxpayer ID number
- It can be your child, grandchild, even you—and you don’t need to be related to the beneficiary
- Only one beneficiary to an account, except when an entity creates a general scholarship account
Contributors
- Anyone can help pay for college with our easy and secure Ugift® platform
- Gifting may also provide advantages for estate and legacy planning; please consult your tax advisor
An account can be opened in anyone’s name (like a parent, grandparent, or family friend) and easily transferred later.
Qualifying Expenses
With ScholarShare 529, you have full control over how to use your funds. Here are the wide variety of qualified education expenses that can support your child in any path they choose to take:
- Tuition at any accredited private or public college or university, community college, technical school, graduate schools, and professional schools across the US and many abroad
- Certain room and board-related expenses
- Fees, books, supplies and other equipment needed for enrollment and attendance
- Computers and related technology such as internet access fees, software or printers
- Certain additional enrollment and attendance costs for beneficiaries with special needs
- K-12 tuition–up to $10,000 annually can be used per student at a public, private or religious elementary, middle, or high school1
- Apprenticeship expenses (fees, books, supplies and equipment) for programs approved by the US Department of Labor under the National Apprenticeship Act1
Funds can also be used in two other helpful ways:
- Repay student loans—up to $10,000 lifetime limit per individual (including principal and interest on any qualified education loan)1
- Transfer additional/leftover funds to another eligible beneficiary such as another child, grandchild, or even yourself
Please see the state tax treatment of withdrawals section in the Plan Description for more information.
See plan details for additional information
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More to explore
Benefits of a 529
Make the most of every dollar you put toward college savings with ScholarShare 529.
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Compare investment options
We make it easy to choose investment options that fit your financial needs and savings goals
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Questions
Have more questions?
No. Your ScholarShare 529 funds can be used at any accredited university in the country—and even some abroad. This includes public and private colleges and universities, apprenticeships, community colleges, graduate schools and professional schools.1 Up to $10,000 annually can be used toward K-12 tuition (per student).2 In addition, your 529 can be used for student loan repayment up to a $10,000 lifetime limit per individual.1 Review a list of qualifying expenses and the state tax treatment of withdrawals for these expenses in the Plan Description.
Footnotes
- 1Withdrawals for registered apprenticeship programs and student loans can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circ*mstances. Read about eligible education expenses. Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act.↩
- 2Withdrawals for tuition expenses at a public, private or religious elementary, middle, or high school can be withdrawn free from federal tax. For California taxpayers these withdrawals are subject to state income tax and an additional 2.5% California tax. You should talk to a qualified professional about how tax provisions affect your circ*mstances.↩
With your ScholarShare 529, you’re never locked in. You’ll always have access to several options for this money:
- Your funds can be used to pay for a variety of eligible education expenses, including at any accredited college, university, apprenticeships, community college or postgraduate program in the United States—and even some schools abroad.1
- Your 529 can be used for student loan repayment up to a $10,000 lifetime limit per individual.1
- Up to $10,000 annually can be used toward K-12 tuition (per student).2
- You can transfer the funds to another eligible beneficiary, such as another child, a grandchild, yourself or a friend.
- If you just want the money back, you can withdraw the funds at any time. If funds are withdrawn for a purpose other than qualified higher education expenses, the earnings portion of the withdrawal is subject to federal and state taxes plus a 10% additional federal tax on earnings (known as the “Additional Tax”). Non-qualified withdrawals may also be subject to an additional 2.5% California tax on earnings. See the Plan Description for more information and exceptions.
- Or you can always wait because the funds never expire, and often the choice to go to school is a delayed decision. So if your child changes their mind down the road, your savings will still be available.
Effective January 1, 2024, 529 funds may be rolled over to a Roth IRA in the name of the beneficiary of the 529 plan.
State tax treatment of a rollover from a 529 plan into a Roth IRA is determined by the state where you file state income tax. There are conditions that must be met including the 529 plan must have been in existence for at least 15 years.
You should talk to a qualified professional about how tax provisions affect your circ*mstances.
Footnotes
- 1Withdrawals for registered apprenticeship programs and student loans can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circ*mstances. Read about eligible education expenses.
Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act.↩
- 2Withdrawals for tuition expenses at a public, private or religious elementary, middle, or high school can be withdrawn free from federal tax. For California taxpayers these withdrawals are subject to state income tax and an additional 2.5% California tax. You should talk to a qualified professional about how tax provisions affect your circ*mstances.↩
Your ScholarShare 529 account can be used at eligible colleges, universities, vocational schools, community colleges, graduate or postgraduate programs, apprenticeships and more.1 Contact your school to determine whether it qualifies as an eligible educational institution or use the Federal School Code Search tool on the Free Application for Federal Student Aid (FAFSA) website.
Footnotes
- 1Withdrawals for registered apprenticeship programs can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circ*mstances.
Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act.↩
There are no sales charges, startup or maintenance fees associated with ScholarShare 529 accounts. For details on total annual asset-based fees, comprised of the underlying investment expenses for each investment option, the plan manager fee and state administration fee, review the Plan Fees for each individual investment portfolio.
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