529 Comparison

529 California College Savings Plan

The ScholarShare 529 Plan of California, beyond providing an easy way to save for a college education, includes many features and benefits that make it even more attractive.

Income earned in a ScholarShare 529 account will grow federal and state tax deferred and if disbursements are used for qualified educational expenses, they will also be free from federal and state income taxes. Further, contributions may qualify for an annual Federal gift tax exclusion on donations up to $13,000 per year per beneficiary ($26,000 for married couples). California, unlike many other states, does not allow any state tax deductions on contributions made to a California 529 account.

The ScholarShare 529 College Savings Plan offers nineteen investment portfolios from which to choose. While the State of California offers the program, TIAA-CREF Tuition Financing, Inc. (TFI) is the Plan Manager.

The Age-based program begins investments for younger beneficiaries in more aggressive funds and as they approach college age, the money is moved into more conservative funds. This is to try an maximize growth while there is still a long time frame, so even if losses occur, there may still be enough time to recover. As college approaches, the desire is to conserve capital with less risky investments.

There are twelve Multi-Fund Investment Portfolios which allow you to choose your own asset allocation, rather than using the automatic fund movement of the age-based plan. Money here is invested in multiple funds, each with a similiar investment objective. These portfolios range from aggressive to conservative and you can have money in any combination of them.
The following are described as maintaining aggressive risk levels

  • Active Diversified Equity Investment Portfolio
  • Active Growth Investment Portfolio
  • Active International Equity Investment Portfolio
  • Passive Diversified Equity Investment Portfolio
  • Passive Growth Investment Portfolio
  • Index International Equity Investment Portfolio
The following are described as maintaining a moderate risk level
  • Active Moderate Growth Investment Portfolio
  • Active Diversified Fixed Income Investment Portfolio
  • Passive Moderate Growth Investment Portfolio
  • Passive Diversified Fixed Income Investment Portfolio
The following are described as maintaining a conservative to moderate risk level
  • Active Conservative Investment Portfolio
  • Passive Conservative Investment Portfolio

Next, there are four Single-Fund Investment Portfolios. If you don't mind increased volatility, these may be for you. Funds are invested in a single underlying fund or a Funding Agreement. The Social Choice Investment Portfolio, Index U.S Large Cap Equity Investment Portfolio and Index U.S. Equity Investment Portfolio are aggressive, while the Index Bond Investment Portfolio is moderate in risk.

Finally, for those conservative investors who are more interested in preserving capital and perhaps have a short timeframe until college, the Principal Plus Interest Investment Portfolio is invested with a Funding Agreement which provides for a return of principal plus a guaranteed rate of interest along with the possibility of a higher rate.

With all the portfolios of the California ScholarShare 529 Plan, investments are not guaranteed and may fluctuate up or down depending on market conditions. For more information on California's Scholarshare 529 plan options, visit http://www.scholarshare.com/.

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