About 529 Plans

How do 529 plans compare to other savings options?

529 plans offer a tax-advantaged way to save for qualified educational expenses. Check out our interactive comparison tool.

How do 529 plans vary?

529 plans vary in a number of ways including: contribution limits defined by the state administrator, fees to open and/or maintain an account, investment options offered, the financial services company that manages the plan and whether a state tax deduction or credit is available to residents participating in the plan. There may also be special programs or benefits defined by the particular plan. Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside, or have taxable income in offers favorable state tax treatment or other benefits if you invest in that state's 529 plan.

If I move out of California, what will happen to my account?

If you move to another state, you can keep your money invested and continue making contributions to your ScholarShare 529 account. Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside or have taxable income in offers favorable state tax treatment or other benefits if you invest in that state's 529 plan.

What if my child decides not to attend college?

If the account beneficiary does not attend college, the account owner may change the beneficiary to another eligible family member. See definition of eligible family member. If funds are withdrawn for a purpose other than qualified higher education expenses, or they are treated as withdrawn due to the naming of an ineligible beneficiary, the amount will be subject to a 10% federal tax on the earnings in addition to federal and state taxes. Non-qualified withdrawals may also be subject to a 2.5% California tax on earnings. Exceptions include: death or disability of the beneficiary, receipt of a scholarship or attendance at a military academy. See the Plan Information and Details section for more info.

How do I know which educational institutions are eligible?

Contact the school to determine if it qualifies as an eligible educational institution or use the Federal School Code Search on the Free Application for Federal Student Aid (FAFSA) website.

How do I open a ScholarShare 529 account or contribute to an existing account?

You can help a child or loved one pay for the rising costs of college by opening a ScholarShare 529 account or by making a gift contribution to an existing account. Open an account online, download enrollment materials or request an enrollment kit by mail. To contribute to an existing account, follow the Gift instructions.

Account Management

Do I need an account for each child?

Individual 529 accounts have one owner and one named beneficiary. Though it is possible to change your designated beneficiary, many parents find it easier to track and manage separate accounts for each of their children.

How can I change my address, bank information, or other account information?

To update your profile information online, including payment information, login here or call the Plan at 1.800.544.5248 Monday-Friday from 8 am to 7 pm PT.

Are there fees associated with opening a ScholarShare 529 account?

There are no sales charges, start-up or maintenance fees associated with ScholarShare 529 accounts. To review the total, annual asset-based fees which include underlying investment expenses, Plan Manager and Board Administrative fees, please see fees and expenses.

How do I transfer account ownership?

You may transfer ownership of your ScholarShare 529 account at any time. Please note this assignment is an irrevocable action transferring all rights, title and interest in the account to another owner. You will no longer have access to or control of the account.

Can I rollover funds from another 529 plan into a ScholarShare 529 account?

Yes, you can transfer funds from another 529 college savings plan to your ScholarShare 529 account for the same beneficiary once within a 12-month period without incurring a taxable event. The 529 plan from which you are transferring funds may be subject to different features, costs and surrender charges. You should consult your tax advisor or the other 529 college savings plan. State and local taxes may apply. For more information see: How to Manage an Incoming Rollover from another 529 account.

Beneficiaries

Who can be the beneficiary of an account?

Any U.S. citizen or resident, including the account holder, can be the beneficiary. The beneficiary must have a valid Social Security Number or Taxpayer Identification Number.

Can I change the beneficiary of my account?

Yes, you can change your beneficiary at any time or transfer a portion of your investment to a different eligible beneficiary. The new beneficiary must be an eligible member of the previous beneficiary's family. For more information see: "Change your beneficiary".

What happens in the event of death or disability of the beneficiary?

If a distribution is attributable to the beneficiary being disabled or is made to the estate of the beneficiary (or a beneficiary of the beneficiary) upon the death of a beneficiary, the earnings portion of such a withdrawal is subject to federal income tax but is not subject to the additional 10% federal tax. A taxable withdrawal is also subject to California income tax but not the additional 2.5% California tax.

Investments

What are my investment choices?

ScholarShare 529 offers you a choice of investment options. These options vary in investment strategy and degree of risk, allowing you to select an option or combination of options that may fit your needs. To see the list of investment portfolios, brief descriptions and associated fees and expenses, visit Researching Investments. For more information on the risks involved in investing and the type of investor for whom each investment portfolio may be appropriate, read the Plan Description (PDF).

Can I change my investment selection?

Yes, each time you make a contribution you may select from any of the ScholarShare 529 investment portfolio options. Once invested in a particular portfolio, contributions and earnings may be transferred to another portfolio twice per calendar year or upon transfer of funds to a Plan account for a different eligible beneficiary (see the Plan Description (PDF) for more information). To transfer funds between portfolios, use the "Change of Investment Form (PDF)."

Where do I get information on ScholarShare 529 performance?

Performance data for the ScholarShare 529 investment portfolios is available here: Historical Performance.

Contributions

How do I contribute to ScholarShare 529?

You can contribute to a ScholarShare 529 account by making a one-time contribution by check or electronic funds transfer, establishing a recurring contribution, payroll direct deposit, or a rollover from another 529 College Savings Program Account, Coverdell Education Savings Account or qualified U.S. savings bond. Click here for more information about how to contribute to Scholarshare 529.

How do I sign up for payroll direct deposit?

If you wish to make contributions to your ScholarShare 529 account from your paycheck, first ask your employer if direct deposit is available, then log in to your ScholarShare 529 account and follow the "Payroll Direct Deposit" instructions found by clicking the Profile & Documents link or submit the appropriate form by mail.

Please see our Forms & Resources page for more payroll direct deposit information.

Are ScholarShare 529 contributions deductible from federal tax?

No, 529 plan contributions are not deductible for federal income tax purposes.

Are contributions made pre-tax or after-tax to a ScholarShare 529 account?

Plan contributions are always made after-tax regardless of the method in which the contribution is made.

What is the maximum I can contribute to an account?

There is no annual limit on the amount you may contribute. However, there is an overall maximum account balance limit of $529,000, which applies to all accounts opened for a beneficiary. Accounts that have reached the maximum account balance limit may continue to accrue earnings.

How do I make a contribution from my tax refund so that it deposits directly from the California Franchise Tax Board to ScholarShare 529?

Have the Franchise Tax Board deposit some or all of your refund directly into one or more of your ScholarShare 529 College Savings Plan accounts.

  • Complete the Refund or No Amount Due Section, Line 115, of CA Form 540 to authorize Direct Deposit (Line 32 of CA Form 540 2EZ)
  • Provide the ScholarShare 529 Routing Number (011001234)
  • Select Checking for Type
  • For Account Number use a prefix of 582 + your 11 digit ScholarShare account number. DO NOT use leading or trailing zeroes.
  • Refer to the following sample:

Image of No Amount Due Section, line 115 showing the form format for the 9 digit scholarshare routing number, account type and the 11 digit scholarshare account number which should be entered with a 582 at the beginning.


Online Access

How do I sign up for e-Delivery?

Log in to sign up for e-delivery, choose a beneficiary and select "View profile and documents," then "Delivery Preferences" from the left hand navigation.

How do I establish online access?

If you open an account online, you'll be automatically set up with online access. If you enroll by mail, you'll need to set up online access separately.

Register for online access now.

I forgot my username?

If you have forgotten your Username, please Click here to recover your username.

I forgot my password?

If you have forgotten your password, click here to recover your password.

I forgot BOTH my username and password?

If you are having difficulty with both your username and password, please contact ScholarShare 529 by phone at 1-800-544-5248 from 8:00 AM to 7:00 PM PT Monday through Friday, excluding holidays. ScholarShare 529 phone representatives wiill assist you with account access.

How do I unlock my account?

If your account has been locked please contact ScholarShare 529 at 1-800-544-5248 from 8:00 AM to 7:00 PM PT Monday through Friday, excluding holidays. ScholarShare 529 phone representatives will assist you with unlocking your account.

How do I change my password?

To change your password, log in to your account, and follow the instructions.

What is Two Factor Authentication?

Two-factor authentication (2FA) adds a second level of authentication to your online 529 account log-in. When you have to enter only your username and one password, that’s considered a single-factor authentication. 2FA requires the user to have two out of three types of credentials before being able to access an account. The three types are:

  • Something you know, such as a verification code, personal identification number (PIN), or password
  • Something you have, such as an ATM card, phone or secure token
  • Something you are, biometrics such as fingerprint, voice print or retinal scan

Why is Two Factor Authentication important?

In this age of phishing attacks and identity thefts, relying on login password alone does not guarantee security. No matter how strong or complex your primary password might be, your account stands the risk of a breach if your password happens to fall into the wrong hands.

Is Two Factor Authentication a new security authentication mechanism?

2FA is not new. When you use your ATM card that is a form of 2FA. You must provide the physical card (something you have) along with your PIN (something you know) in order perform a financial transaction.

Is Two Factor Authentication hard to use?

No, it can be a minor inconvenience but much depends on your patience and your willingness to spend the extra time to ensure a higher level of security for your online 529 account.

How does Two Factor work?

You’ll sign into your account as you normally would with username and password but then you’ll be presented with a selection of options from which to choose how you will receive your PIN. You’ll receive either a text message or automated call with a PIN on your device. Simply enter that code in the designated box and follow the remaining prompts.

What is a PIN?

A PIN is a one-time personal verification code that is delivered via SMS (text), Robo-call or a customer service representative.

How are Two Factor Authentication PINs delivered?

You will be able to select any of the following options; either SMS text to a mobile number, Robo call to a land line or you may call into our call center and speak with a customer service representative.

Will I need to enter a PIN every time I log in to my 529 online account?

It depends on the level of security and ease with which you wish to sign into your account. To simplify sign-in after initial enrollment into 2FA you may select a trusted device for future sign-ins. Once you have designated the trusted device, your future logins will no longer require you to enter a code each time you sign-in. On your next login you will only be prompted for your username and password. Please note that if your next login is longer than six months you will have to repeat the process for trusting the device again.

What is a trusted device?

A trusted device is one that you routinely use and are comfortable that no one else will have access to.

What if I forgot my password?

If you’ve forgotten your password, simply follow the prompts under option for Forgot my Password.

What if I don’t have access to my trusted device?

If you don’t have access to your trusted device you may connect from another device but you will be prompted for a PIN.

What if I didn’t receive my PIN?

If you didn’t receive a PIN then you may prompt the system to send you another. PINs are only valid for 5 minutes. Once you’ve requested a new PIN the previous one becomes invalid.

If I can’t sign in, how do I regain access to my account?

You can call customer service and they will be able to assist you.

How Can I Use an Aggregator With My Account?

Aggregators provide a service which allows users to pull together balance and activity information from different financial accounts into a single view.

How do Aggregators work?

Aggregators use a form of technology called data scraping. Data scraping is the process of extracting information from web sites. In this instance, the computer from your aggregator service will login to your account using your personal security credentials to extract information from your webpages.

How do Aggregators access 529 online account balance and activity information?

In order for an aggregator provider to access your 529 online account, you, the account owner, must provide the service with your existing username and password in order for the aggregator to “scrape” data from your account screens.

How does Two Factor Authentication affect Aggregators accessing my 529 online account?

Essentially, use of 2FA will break aggregator access. This will happen because aggregators will not be able to use your existing login credentials to access the account as they have no way of receiving your PIN. We have a solution to this problem. Please sign into your account and create aggregator read- only log-in credentials.

What are Aggregator read-only credentials and how does this benefit me?

Aggregator read-only log-in credentials are for use by aggregators. The username and password is different from that of your 529 account. Once created, these new log-in credentials will allow you to continue to utilize your aggregator service. By using the aggregator read-only log-in credentials, the aggregator will no longer have your primary username, password, and your personal and sensitive information. The aggregator will only have access to the necessary information needed to create your financial view such as basic account and investment details along with account transactions.

Why is my Aggregator service no longer working?

Your aggregator service may no longer be working due to the following reasons:

  • You have not created the read-only aggregator log-in credentials. To create your aggregator log-in credentials:
    • Log in to your account
    • Select "Profile & Documents"
    • Select "Password & Security Features"
    • Under "Manage Financial Aggregator Access," select "Edit"
    • Create password and copy the new URL
    • Visit your aggregation service provider to provide the new URL and login credentials so that the aggregator can continue to access your 529 account.
  • You have not selected the correct aggregator URL for your 529 plan.
  • Your aggregator service has not created a new URL for your 529 plan. If that is the reason your service is no longer working, please reach out to your aggregator service provider.

Financial Aid/Scholarships

What if my child receives a scholarship?

If the account beneficiary receives a scholarship covering qualified expenses, you may withdraw funds from your 529 account equivalent to the amount of the scholarship without incurring the 10% federal tax on the earnings portion. However, the earnings portion will be subject to federal and state income tax. If the amount withdrawn exceeds the amount of the scholarship, the earnings portion of the excess amount will be subject to the additional 10% federal tax penalty. Please consult with a qualified tax advisor or consultant.

Will saving with a 529 plan affect financial aid eligibility?

Assets in a parent owned 529 account have less of an impact on financial aid than some other savings methods. "Expected Family Contribution" (EFC) calculations generally factor parent assets outside of retirement savings at approximately 5% whereas student assets are generally factored in at 20% or more. Therefore, a parent owned 529 account has less of an impact on financial aid eligibility than assets owned by the student.

Click here to learn about federal and state grants and federal student loans..

Does my beneficiary have to attend a California college or university?

No. The money in your ScholarShare 529 account may be used at any eligible educational institution in the United States, and some abroad. This includes public and private colleges and universities, graduate schools, community colleges, certain proprietary and vocational, and apprenticeship programs registered and certified with the Secretary of Labor under the National Apprenticeship Act.

In addition, up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used for tuition expenses at a public, private or religious elementary, middle, or high school.

Click here to learn about the tax advantages of a California 529 plan.

Withdrawals

How do I withdraw money to pay for college?

You may request a withdrawal via your account online. Select the beneficiary you would like to withdraw the money for, click "Make a Withdrawal" on the left hand navigation and follow the directions. Alternatively, you may request a withdrawal by using the Withdrawal Form.

What is a taxable withdrawal?

Taxable withdrawals are withdrawals due to the beneficiary's death, permanent disability, receipt of a scholarship award, or attendance at a military academy. A taxable withdrawal will be subject to applicable federal income tax on earnings, if any, but will not be subject to the 10% additional federal tax on earnings (the "Additional Tax").

A taxable withdrawal may also be subject to California income tax but not the additional 2.5% California tax.

See the Plan Description (PDF) for additional information.

What are qualified higher education expenses?

Qualified higher education expenses include tuition, fees, and the cost of books, supplies, and equipment required for the enrollment and attendance of the Beneficiary at an eligible educational institution and certain room and board expenses. Computers and related technology such as internet access fees, software or printers are also qualified education expenses when used primarily by the beneficiary when enrolled at an eligible educational institution. Qualified higher education expenses also include certain additional enrollment and attendance costs of a beneficiary who is a special needs beneficiary in connection with the beneficiary's enrollment or attendance at an eligible institution. For this purpose, an eligible educational institution generally includes accredited post-secondary educational institutions offering credit toward a bachelor's degree, an associate's degree, a graduate-level degree or professional degree, or another recognized post-secondary credential.

In addition, up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used for tuition expenses at a public, private or religious elementary, middle, or high school.

In addition, the following expenses can be withdrawn free from federal tax:

  • Expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act.
  • Up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used for tuition expenses at a public, private or religious elementary, middle, or high school.
  • Repayment of up to $10,000 (including principal and interest) on any qualified education loan of either a 529 plan designated beneficiary or a sibling of the designated beneficiary. To be a qualified expense, the loan repayment amount for an individual is subject to a lifetime limit of $10,000.

Please see the state tax treatment of withdrawals.

What is a non-qualified withdrawal?

A non-qualified withdrawal is any withdrawal that does not meet the requirements of being: (1) a qualified withdrawal; (2) a taxable withdrawal; or (3) a rollover. The earnings portion of a non-qualified withdrawal is subject to federal income taxation, and an additional 10% federal tax. Non-qualified withdrawals may also be subject to an additional 2.5% California tax on earnings. Recapture provisions apply. See the Plan Information and Details section for more information.

Are computers, tablets and associated costs considered qualified higher education expenses?

Computers and related technology such as internet access fees, software or printers are also qualified education expenses. The student must be the primary user of the equipment.

What room and board expenses are covered?

The beneficiary must be enrolled at least half time at an eligible post-secondary institution. For students living in housing owned and operated by the institution, the full invoice amount will be used to determine the qualified room and board expenses. For those students living at home or in off-campus housing, the "cost of attendance" allowance for the individual institution will be used for the qualified room and board expenses.

Is paying off a student loan a qualified higher education expense?

Federal tax treatment of 529 plan qualified higher education expenses or QHEEs includes the repayment of up to $10,000 (including principal and interest) on any qualified education loan of either a 529 plan designated beneficiary or a sibling of the designated beneficiary. To be a qualified expense, the loan repayment amount for an individual is subject to a lifetime limit of $10,000.

Click here to learn about California tax treatment of 529 account withdrawals to repay student loans.

What is the status of my withdraw request to the school?

To view details of a withdrawal request, login to your account. If you have more than one beneficiary, select the beneficiary whose withdraw status is in question. Once you have selected the beneficiary account, scroll to "Transactions" which is located at the bottom of the page. Locate the withdrawal request and select "Check details" to view the date the withdraw was requested, approved, issued, who it was payable to, the address it was mailed to, the check number and the status.