Get answers to your questions about saving for college, how to withdraw the money you save, tax benefits and investing options with Future Scholar.
About 529 accounts, how to save, who is eligible and where you can use the money
A 529 plan is an investment account that can help you save for the high cost of education over time. 529 plans are sponsored by individual states and are called "529 plans" because they were created under section 529 of the Internal Revenue Code. These college savings vehicles provide tax advantages when the savings are used for qualified college expenses.
Any U.S. citizen or resident alien of legal age can open an account.
There are no age restrictions on beneficiaries — an account can be set up for a child, teenager, or even an adult. Family and friends can even establish Future Scholar accounts for the same child, as long as the total of all accounts does not exceed the overall contribution limit of $400,000 per beneficiary.3
Any legal U.S. resident can be a beneficiary. There are no age, income or family relationship limits. You can even open an account with yourself as the beneficiary, to help with your own higher educational expenses. As an account owner, you determine who will use the money.
The money you save in a 529 plan can be used for qualified higher education expenses, which include:
The money you save can be used at any eligible educational institution in the United States, including out-of-state and some international schools:
You can search for eligible educational institutions at the Federal Student Aid (FAFSA) website.
Opening a Future Scholar account to save for a loved one's education is easy:
Ongoing account access:
Making contributions, taking withdrawals and handling unforeseen changes
Any U.S. citizen can contribute to a 529 plan account. You can even invite friends and family to help you save.
Contributions to a single beneficiary, across all 529 accounts, cannot exceed $400,000 in South Carolina.
You may contribute to more than one person's 529 account. Contribution limits apply to the beneficiary, not the account owner or contributor.
"Frontloading" is an exception to the Gift Tax limitation. Within one year of opening the account, you may contribute for the first five years all at once, up to $70,000 (or $140,000 for couples), as long as you don't contribute any more for the five years following the account opening.
This is great for those with lump sums, such as inheritances, and it also allows more money in the account sooner, giving it more time for potential growth.
Yes, as long as certain requirements are met. 529 plan accounts accept only cash contributions, so the assets in an UGMA/UTMA account must be liquidated. Check with your tax advisor about liquidation.
There are restrictions on Future Scholar 529 Plan accounts that receive assets from an UGMA/UTMA liquidation which are not present on accounts without UGMA/UTMA contributions:
Yes, subject to restrictions. 529 plan accounts accept only cash contributions, so assets in a Coverdell account must be liquidated first to make the transfer.
Because taking a distribution from your Coverdell account to invest in a 529 plan is considered a qualified withdrawal, it is not subject to federal income tax.
Yes. As long as total of all accounts for the same beneficiary in a given state does not exceed that state's maximum contribution limit, a beneficiary can have more than one account under different account owners and under different state plans.
For South Carolina, the maximum contribution limit for all accounts per beneficiary is $400,000.
Yes, you can change the beneficiary on your account, with certain limitations. If the new beneficiary is an eligible relative of the current beneficiary, the change can be made without federal income tax or penalty.
For purposes of changing beneficiaries on a 529 plan account, the IRC defines a qualified family member as one of the following relatives of the current beneficiary:
Yes. You can open an account for any eligible beneficiary. There are no contribution limits for account owners.
A 529 plan is treated as the parent's (or account owner's) asset in determining eligibility for federal financial aid.
Learn more about the financial aid formula.
The money you save can be withdrawn at your discretion. However, earnings on withdrawals to cover expenses other than qualified education expenses will be subject to ordinary income tax and, in most cases, a 10% federal penalty.
If your child decides not to go college, you can transfer the account to a new beneficiary as long as he or she is a relative of the original beneficiary.
If your student receives a scholarship, you can withdraw up to the amount of the scholarship without a 10% federal penalty.
Tax benefits and investment options to help you grow your money
Money in your account grows free from federal and South Carolina state income taxes. Withdrawals are also tax-free as long as that money is used for qualified higher education expenses.1
If you file a South Carolina tax return, either as a resident or non-resident, you may be eligible for additional tax advantages2
Yes. With Future Scholar you have the flexibility to choose an investment strategy that makes sense for your individual needs. Each portfolio provides the benefit of professional investment management from Columbia Management.
You can choose from three different investment options:
Learn more about the Future Scholar investment options.
Yes. You can reallocate current investment selections twice per calendar year, according to tax law. You can change the allocation of future contributions at any time.
No, your investment is not guaranteed. Please consider the investment objectives, risks, charges and expenses carefully before investing in the Future Scholar 529 College Savings Plan. Contact your financial advisor or visit futurescholar.com for a Program Description , which contains this and other important information. Read it carefully before investing.
1 Please see the Program Description for more information on qualified educational expenses.
2 Tax treatment varies by state. For residents of states other than South Carolina, favorable state tax treatment for investing in a Section 529 college savings plan may be limited to investments in a Section 529 college savings plan offered by your home state. You should consult with your tax advisor about any state or local taxes before making any tax-related decisions. This tax information is general in nature and does not constitute tax advice on the part of Columbia Management Investment Distributors, Inc., its affiliates or the South Carolina Office of State Treasurer.
3 Lower limits may be set by South Carolina state law.
Please consider the investment objectives, risks, charges and expenses carefully before investing in the Future Scholar 529 College Savings Plan. Contact your financial advisor or visit futurescholar.com for a Program Description , which contains this and other important information. Read it carefully before investing. You should also consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Columbia Management Investment Distributors, Inc., distributor and underwriter.
The Direct Plan is sold directly by the Program and is limited to a specific group of investors, as described in the Program Description . You may also participate in the Advisor Plan, which is sold exclusively through financial advisors. The Advisor Plan offers additional investment choices, but the fees and expenses are higher. Please contact your financial advisor for additional information on the Advisor Plan.
The Office of State Treasurer of South Carolina (the State Treasurer) administers the Program and has selected Columbia Management Investment Advisers, LLC and Columbia Management Investment Distributors, Inc. (Columbia Management) as Program Manager. Columbia Management and its affiliates are responsible for providing certain administrative, recordkeeping and investment services, and for the marketing of the Program. Columbia Management is not affiliated with the State Treasurer.
This information does not constitute tax or legal advice. Neither the State Treasurer, Columbia Management Investment Advisers, LLC, nor its affiliates, provide tax or legal advice. Please consult your tax adviser before making tax-related decisions.
Withdrawal of earnings not used for qualified higher education expenses will be subject to federal and possibly state and local income tax and may be subject to an additional 10% federal penalty tax.
Open an account with no minimum amount.
Keep saving with optional automatic transfers.
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© 2017 South Carolina Office of State Treasurer
Please consider the investment objectives, risks, charges and expenses carefully before investing. Contact your financial advisor or visit futurescholar.com for a Program Description, which contains this and other important information about the Future Scholar 529 College Savings Plan. Read it carefully before investing. You should also consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. The Office of State Treasurer of South Carolina (the State Treasurer) administers the Program and has selected Columbia Management Investment Advisers, LLC and Columbia Management Investment Distributors, Inc. (Columbia Management) as Program Manager. Columbia Management and its affiliates are responsible for providing certain administrative, recordkeeping and investment services, and for the marketing of the Program. Columbia Management is not affiliated with the State Treasurer.
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