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Facts About California's 529 Plans

By    |   Wednesday, 20 May 2015 10:54 AM

A higher education is becoming harder for most Americans to afford with rising tuition and cost of living expenses This holds true in California, where a 529 savings plan is being offered.


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If not taken advantage of, the state's brightest may be denied education simply because of the expense, not because they have not performed well enough academically in high school. According to the United States Security and Exchange Commission, These 529 tax-advantaged savings plans are authorized by the IRS to encourage people to save for future college costs. These plans, legally known as "qualified tuition plans," are sponsored by states, state agencies or educational institutions and differ from one state to the next on what they offer and entail.

Additionally, 529 plans come in two forms: pre-paid tuition plans and college savings plans. Every state and the District of Columbia sponsor at least one type of 529 plan, as do private colleges and universities. California offers a 529 plan called the ScholarShare College Savings Plan. Here are several facts about it. 
 


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  1. California's ScholarShare plan earnings are federal and state income tax-deferred.
  2. There is no California income tax deduction associated with ScholarShare.
  3.  To open a ScholarSahre account, you must have a Social Security number or a federal Taxpayer Identification Number, and either be a citizen of the United States or a resident alien.
  4. California 529 investment plans were taken over in 2011 by TIAA-CREF and feature two age-based options that include an actively managed mutual fund and another using index mutual funds, according to Savingforcollege.com.

  5. Contributions to California's ScholarShare College Savings Plan are made post tax.

  6. Earnings used to pay for qualified higher education expenses are Federal and California income tax free.

  7. You can open a ScholarShare plan with just $25, if you choose to contribute to the account using deductions from your payroll, then the minimum contribution is $15, according to ScholarShare.

  8. There are no income limitations to participate.
  9. Contributions to ScholarShare may reduce the taxable value of your estate.

  10. Each year,  a donor to the plan can qualify for a federal gift tax exclusion for the contributions they make to the plan. An individual donor can receive a $14,000 gift tax exclusion, while a married couple can receive an exclusion of twice that amount.

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A higher education is becoming harder for most Americans to afford with rising tuition and cost of living expenses This holds true in California, where a 529 savings plan is being offered.

529 plans, California, facts
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2015-54-20
Wednesday, 20 May 2015 10:54 AM
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