California 529 College Savings Plan
California 529 Plan Explained
California offers a 529 plan that is designed to help you save the most for your future kid’s tuition costs. California offers a plan called the ScholarShare College Savings 529 plan. If you live in California, you need to consider investing through this 529 plan and incorporate it into your overall investment portfolio!
California 529 plan Tax Advantages
If you contribute to a California 529 plan and end up using the money for college related expenses, all of the money will be free of both federal and California tax.
Another big advantage of a California 529 plan is that contributions may reduce the total value of your estate. What this really means is that you may qualify for federal gift tax exclusion. For single filers, this can be as high as $65,000 and $130,000 for joint filers.
Flexible Features of the California 529 plan
The beauty of a 529 plan is the flexibility. The California 529 plan provides just that in terms of flexibility. Did you know that anyone can open an account as long as you’re over 18? Plus, you will never need California state residency.
Along similar lines of flexibility, the funds within the 529 plan are not limited to the state of California. In fact, you may use the funds in any school around the country as well as many schools around the world.
In terms of qualified expenses, everything from tuition to room and board costs is eligible for 529 funds.
Choosing your Investment Portfolio
Are you picky in when it comes to your investments? California has you covered then. Through a wide variety of investment portfolios, you have 19 options to pick from.
If you’re worried about minimum contributions, California’s 529 plan lets you start investing at a measly $25. There are no income limitations, so it doesn’t matter how much you bring in each month.
If you are an aggressive saver, there is a cap of $350,000 that you can contribute to a California 529 plan.
If it ever comes up that you need to change the beneficiary, California makes it easy by letting you simply transfer the account to another child. This way, you ensure that your investment is not dinged by taxes and the new beneficiary receives the full investment.
California 529 Plan Fee Structure
The fee structure for the California 529 plan is enticing for many people. Due to the portfolio selection range, the fees vary from 0.18%-0.62%. You should look at the portfolios and make a decision that is right for you. As a note, there are no start-up fees or maintenance fees that California charges for this investment vehicle.
Who Manages it?
Your money will be in good hands within the California 529 plan. The established TIAA-CREF Tuition Financing will be taking care of your money while it is within the 529 plan. With a resume 90 years long, TIAA-CREF has a record of managing American money very well.
Access to Your California 529 Plan
Once your money is invested through the California 529 plan, what’s next? Well, first off, you will be able to access your 529 account any hour, any minute of the day. You also have the ability to change when automatic withdrawals come out amongst a wide variety of other features.
Eligible Institutions Nationwide
Again, just as a reminder, any money within a California 529 plan is not limited to the state of California. You can use the funds in any school in any state.
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