Understanding 529 plans and their benefits
Give the gift of knowledge, career skills and life-changing opportunities to a loved one—in the form of a tax-advantaged, benefits-oriented college savings account that can be used for a variety of qualified educational expenses.
What is a 529 plan?
Kick-start your college fund with an account that’s flexible, simple to manage and grows tax-deferred!
How Our 529 Plan Works
A tax-advantaged way to save for college and other educational expenses
Can be used for expenses like tuition, fees, computers, textbooks, and room and board2
A lower impact on financial aid qualification than many other investment options1
Can be opened with any dollar amount and 15 minutes of your time
What can ScholarShare 529 do for me?
Tax-advantaged growth potential
ScholarShare 529 provides tax benefits for California families saving for college. Any earnings are tax-deferred, and withdrawals are tax-free when used for qualified higher education expenses. These tax advantages can add up and give your beneficiary an even bigger head start!
Limitations apply.2
With tax-deferred growth, you can grow your college savings faster.
Potential benefits of tax-deferred growth in 18 years*
- Taxable Investment
- $2.94
- Tax-Deferred Investment
- $3.61
Read about material differences between taxable investments and ScholarShare 529.
Graph Footnotes
- *Hypothetical example. This chart shows the hypothetical growth of $1.00 invested in a Taxable and Tax-Deferred Investment over 18 years with an annual return of 7.4%. Performance represented by the Standard & Poor’s 500 Index (S&P 500 Index) average twenty-year forward looking assumptions as of September 2023. Tax calculations assume federal tax rate of 22%, a state income tax rate of 6%, that all taxable investment earnings are paid annually, and that state taxes are not federally deductible. This illustration is for informational or educational purposes only and does not constitute advice, represent actual performance or predict future results and does not reflect any reduction for investment expenses. This material does not take into account any specific objectives or circ*mstances of any particular investor, or suggest any specific course of action. Be sure to consult your legal or tax professional for tax advice.↩
View data table
Low fees and expenses
Investment expenses for ScholarShare 529 are less than half the national average and less than one third of what you’d pay for a broker-solid plan.3
When you open an account, you can enjoy a variety of no-cost perks such as:
- NO application fees
- NO cancellation fees
- NO change-in-beneficiary fees
- NO change-in-investment-portfolio fees
- NO loads or sales charges
- NO commissions
- NO transfer fees
Investment Options
ScholarShare 529 offers a variety of professionally managed investment portfolios to fit your life situation, risk tolerance and college savings goals. So, whether you’re a new or experienced investor, prefer to be hands-on or would rather “set and forget,” there’s a plan for you!
Investment Options
Flexible spending
ScholarShare 529 is designed to meet the ever-changing needs of today's California families.
- Programs: Eligible colleges, universities, vocational schools, community colleges, even graduate or post graduate programs and more.
- Locations: In-state or around the world
- Expenses: Tuition, fees, required computers, textbooks, equipment, supplies, even internet access--plus room and board on campus or equivalent off-campus rent
- Other uses: Certain apprenticeship expenses, qualifying K-12 tuition expenses, and some student loan repayments.4 There are no time limits, and you can transfer funds to another eligible beneficiary at no cost.
- 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.
This 529 plan was created by the State of California
The California Board of Trustees selected TIAA-CREF Tuition Financing, Inc. (TFI) as ScholarShare 529’s Plan Manager. TFI is a wholly owned subsidiary of TIAA, one of America’s leading financial services organizations for over 100 years.
Who We Are
What’s next?
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ScholarShare 529
Relevant FAQ
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.↩
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.↩
Assets in a parent-owned 529 account have less of an impact on financial aid than some other savings methods. Expected Family Contribution (EFC) calculations for financial aid generally factor parent assets outside of retirement savings at approximately 5%, whereas student assets are generally factored in at 20% or more. Therefore, a parent-owned 529 account may have less of an impact on financial aid eligibility than assets owned by the student.1
Footnotes
- 1The treatment of investments in a 529 savings plan varies by school. Assets are typically treated as the account holder’s and not the student’s. (Student assets are generally assessed at 20%, whereas parental assets are generally assessed at 5.6%.) Any investments, including those in 529 accounts, may affect the student’s eligibility to get financial aid based on need. You should check with the schools you are considering regarding this issue.↩
ScholarShare 529 offers a variety of smart investment options to fit your life situation, risk tolerance and savings goals. These portfolios vary in investment strategy and degree of risk, allowing you to select a portfolio or combination of portfolios that fit your needs and savings goals.
To compare our ScholarShare 529 investment portfolios, visit our Investment Comparison page. For more information on the investment objectives, risks, charges and expenses, read the Plan Description.
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