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California 529 College Savings Plan

Aug 7, 2012

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. If you save with the California 529 plan and use the money for college related expenses, all of the money will be free of both federal and California tax.

California’s 529 plan lets you start investing at $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 maximum cap of $350,000 that you can contribute to a California 529 plan.

Due to the portfolio selection range, the fees vary from 0.18%-0.62%.
The established TIAA-CREF Tuition Financing is the administrators of the 529 plan.

ScholarShare Investment Portfolios:


You can invest in any one or a combination of ScholarShare’s 19 investment portfolios, which vary in their investment strategy and degree of risk. ScholarShare offers three broad categories of investment options:

  • Active Investment Options: The fund manager selects the securities to buy for the fund. 
  • Age-Based Option, actively managed: Seven single-focus actively managed portfolios. 
  • Passive Investment Options : Securities are selected to mirror a specific market index. 
  • Age-Based Option, passively managed: Nine single-focus passively managed portfolios. 
  • Principal Plus Interest Portfolio: Assets allocated to a Funding Agreement issued by TIAA-CREF Life Insurance Company (TIAA-CREF Life) 

Fees


Total asset-based expense ratio: 0.18% - 0.62%. None for the Principal Plus Interest Portfolio.

State tax recapture provisions:


There is no state tax deduction and therefore no recapture. However, a non-qualified withdrawal by a California taxpayer is subject to an additional 2.5% California penalty tax on the earnings portion, but only if subject to the the additional 10% federal additional penalty tax.

Telephone: 1-800-544-5248     Website: www.scholarshare.com

Got further questions? Catch me on twitter and DM me @529SavingsPlans or e-mail me at 529CollegePlans at Gmail.comWant to be heard? Leave a reader comment below.

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