The Future Scholar 529 Plan
As college costs continue to rise, now may be the best time to consider a 529 college savings plan. As a qualified tuition savings plan under Section 529 of the Internal Revenue Code, a 529 plan provides investors with a smarter way to plan for a child’s college education by offering tax advantages, gifting and estate planning benefits, flexibility and control.
Key benefits of a 529 college savings plan
- Ability to contribute up to $15,000 per year ($30,000 for married couples), per beneficiary, without triggering federal gift taxes
- A special five-year forward gifting provision allows for larger gifts that are also gift-tax-free
- Maintain complete control of the account (including ability to revoke gifts), even though contributions are considered completed gifts and are excluded from the account owner’s taxable estate
- Change the beneficiary (to a qualified family member of the original beneficiary) if needed
- Make a withdrawal from the account1
- Earnings grow exempt from federal taxes, and in many states, also state income taxes
Future Scholar 529 Plan Advantages
- An expanded, multi-managed investment lineup
- Low fees — one of the lowest-cost advisor-sold plans in the country2
- High contribution limit of $520,000
- Joint ownership of accounts
- The strength and stability of a well-known asset manager — Columbia Threadneedle Investments
Benefits for South Carolina taxpayers
The Future Scholar 529 Plan is sponsored by the South Carolina Office of the State Treasurer and offers South Carolina taxpayers additional tax advantages. Contributions up to the maximum account limit of $520,000 per beneficiary are tax deductible from a client’s South Carolina state income taxes.3
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1 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% penalty.
2 Among the lowest 10th percentile based on Offering Statements and Program Descriptions of 529 plan distributors as provided to Savingforcollege.com.
3 Contributions to a Future Scholar account are tax deductible for South Carolina residents. If you file a resident or non-resident South Carolina tax return, you may be eligible to deduct your Future Scholar contributions from your South Carolina state income tax return, up to the maximum account balance limit of $520,000 (or any lower limit under applicable law). When you withdraw money to pay for qualified higher education expenses, you pay no South Carolina state income tax on your withdrawals. Grow any potential earnings on contributions state- and federal-income-tax-free while invested in their account.
Please consider the investment objectives, risks, charges and expenses carefully before investing. Contact your financial advisor or visit columbiathreadneedle.com for an Advisor Plan program description or visit futurescholar.com for a Direct Plan 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 state benefits such as financial aid, scholarship funds and protection from creditors that are only available for investments in such state's qualified tuition program.
Columbia Management Investment Distributors, Inc., member FINRA, is the distributor and underwriter for the Future Scholar 529 College Savings Plan Financial Advisor Program. The Office of State Treasurer of South Carolina (the State Treasurer) administers the program and has selected Columbia Management Investment Advisers, LLC. (CMIA) as program manager. CMIA and its affiliates are responsible for providing certain administrative, recordkeeping and investment services, and for the marketing of the program. CMIA is not affiliated with the State Treasurer.
Columbia Threadneedle Investments does not offer tax or legal advice. Consult with a tax advisor or attorney.