By: Rita Cunha

All About California’s ScholarShare College Savings

College is expensive, but you don’t have to be a millionaire to help your kid through it. With ScholarShare, saving for college becomes worlds easier. This special plan can make your money work for you better than any other regular savings account. Why not start investing in your child’s future today?

What Is ScholarShare?

ScholarShare 529 is a savings plan that helps you save for college.

Some people liken it to a 401(k) plan. You save funds every month (or weekly or quarterly), and through attractive returns on investment, you have nice lump sum at the end to meet a larger savings goal.

But instead of going towards retirement, funds in a 529 college savings plan go towards college tuition and qualified higher education expenses like room and board, lab fees, and school supplies. Funds in a 529 plan can also be used for vocational school, trade school, graduate school, online learning and job training programs,

Open your ScholarShare 529 plan account today and start making contributions quickly and easily. Once your child or grandchild goes off to school, they can spend the money you’ve accrued on qualified education expenses.

ScholarShare helps working California families meet their college savings goals.

The ScholarShare 529 Plan is offered by the state of California. TIAA-CREF Tuition Financing Inc (TFI) is the program manager. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, is the distributor and underwriter for the ScholarShare College Savings Plan. The ScholarShare Investment Board sets investment policies and oversees all Scholarshare 529 activities. Additionally, all official social media platforms related to ScholarShare are managed by the State of California.

Visit the ScholarShare Plan website ScholarShare.org for other important information about the state-sponsored 529 plan.

How Does ScholarShare 529 Work?

In sum, ScholarShare 529 puts your money into different investment options to grow your savings. Then, when your child has graduated from K 12, they can spend it on higher education expenses. This includes not only tuition but also textbooks, school fees, and room and board.

Moreover, your child may still be eligible for state benefits such as financial aid scholarship funds despite having this account. Declaring a 529 on the FAFSA application forms is very straightforward.

Who Can Sign Up for a 529 Plan?

Don’t be fooled by the name. California’s ScholarShare 529 Savings Plan account is open to all citizens and taxpayers in the United States, not just California residents.

You don’t have to be a California State resident to open a 529. As long as you have a social security number, you can invest in your child’s future with ScholarShare.

On top of that, your child does not have to attend a California school to withdraw their savings either. Enrollment in any state’s qualified tuition program is all they need to access funds.

You can sign up for a ScholarShare account on the plan’s website or by contacting financial professionals familiar with college planning. The ScholarShare plan web site is easy to navigate and consumers report being able to sign up in just a few minutes.

Additionally, you can link your ScholarShare plan (or any other 529 plan) to the Upromise rewards portal and earn a free $25 bonus. In other words, Upromise is giving away $25 in free college money to any existing 529 plan. You just have to take a couple minutes to set up a 529 plan and then a couple more minutes to link the account to Upromise.

Additionally, ScholarShare 529 has a matching grant program. You can get a matching grant of up to $225 for starting a new ScholarShare account. This matching grant was available for new accounts at the time of the article’s last update. The availability or amount of the grant, or other state benefits, are subject to change at any time and without prior notice.

How Do I Withdraw Money from ScholarShare?

Withdrawing money for qualified expenses is easy with ScholarShare 529. Go to the website and log into the account as the account owner. Then, select the “withdraw” option and select what beneficiary bank account you would like to send that money to.

Do keep in mind that there are penalties for not spending your money on qualified expenses. Your earnings may be subject to an additional federal income tax and California state tax, as this is strictly an educational savings account.

Why Choose ScholarShare?

There are many 529 plans sponsored by different states and institutions. Which one you choose is up to you. There is a lot of information to read and consider, so you need to do your research.

Yet, we can highlight three aspects that make California State’s ScholarShare 529 College Savings Plan better than most—and why it might be the best choice to help you save for college.

100% Tax-Free Growth

Any earnings you get from ScholarShare 529 plans are free from federal income tax and state tax. That means your child gets to keep all the funds from their account.

With time, that adds up! When you put your money into a ScholarShare 529 account, you can have up to 25% more than if you had stashed it in a regular taxable savings account. This is what makes this plan such a good idea for your child’s future.

Tax-Free Contributions

On top of that, ScholarShare 529 College Savings Plans give tax benefits to anyone gifting money into the account. Account owners, friends, and family can make contributions and not worry about the federal gift tax or “kiddie tax.” Plus, there are other estate tax benefits, too.

To make the most of these perks, be sure to get personalized tax advice and information from your legal or tax professional.

Low-Cost and Low Fees

ScholarShare 529 beats all others because of its low cost and low fees. Most plans out there (e.g. Rowe Price College Savings, New York’s Direct Plan Account, and so on) eat away at your hard-earned savings through pesky fees. But ScholarShare 529 plan is a much more affordable option.

Besides, you can start contributing with as little as $25. Unlike other 529 plans, you don’t need to commit huge amounts to your child’s ScholarShare 529 account. Instead, little by little, you can give them a healthy financial head start.

Smart Investment Tools

ScholarShare 529 has plenty of investment options for you to choose from. You can pick age-based options, such as the Enrollment Year Investment Plan, so your savings grow safely and flexibly alongside your child. Or, after you consider it carefully, design your custom investment portfolio.

You can find out more about investment objectives, risks, charges, expenses, and more information about the ScholareShare 529 plan here. Whichever investment path you follow, you can rest assured your child’s future is already looking brighter.

What Is ScholarShare 529? A Quick Guide for California Parents & Families