Freedom with Future Scholar
By: South Carolina State Treasurer Curtis Loftis, Administrator of the Future Scholar 529 College Savings Plan
As I travel around our beautiful state, I see families preparing to celebrate the 250th anniversary of the signing of the
Declaration of Independence. Their many patriotic displays show they understand that the ideals put forth and adopted on July 4, 1776, are foundational to the individual liberties we enjoy today. As Americans, we appreciate freedom in every aspect of our daily lives and value the control it gives us.
Even families saving for their children’s future education want the freedom to make choices in how they use their money. That’s why many families choose to save with South Carolina’s Future Scholar 529 College Savings Plan. Future Scholar offers account owners who are saving for education more flexibility than ever before. Below are some of the key freedoms that Future Scholar 529 account owners and their beneficiaries can enjoy.
FREEdom in how it’s used
You probably know that Future Scholar funds may be used for tuition, but they’re also available to be used for many more education expenses. Whether your child will be living in an on-campus student dorm or in an off-campus apartment, you’re able to use funds from your Future Scholar account to pay for qualified housing as well as student meals. In addition, Future Scholar funds may be used to pay for books, software, computers, supplies and any equipment required to complete coursework.
Tax-FREE
Few investment vehicles allow you to invest money and grow it tax-free, but the Future Scholar 529 plan does. Future Scholar even allows you to deduct 100% of your account contributions from your South Carolina state tax return. In addition, any earnings from your contributions are tax-free and compounded. Through compounding, the gains your account earns have the opportunity to make more gains – all tax free.
And when your child is ready to use their Future Scholar funds, you’re allowed to withdraw the money tax-free also, as long as the funds are being used to pay for qualified education expenses.
FREEdom in where it's used
You can’t predict what your child’s dreams and goals will be, so Future Scholar provides the flexibility to use your funds at a variety of educational institutions. You may use funds at any accredited two-year or four-year public or private college, university, technical college, trade school, graduate school program, professional program or apprenticeship across the United States and in many foreign countries. You may also use funds for professional licensing fees or certificates. You may even use Future Scholar to pay for up to $20,000 per year of qualified expenses at a public, private or religious K-12 school.
529 FREEdom equals control
Your Future Scholar funds are always your money, and you have options that keep you in control of any leftover funds in your account.
Transfer the funds. If you have unused Future Scholar funds, you can transfer them to another family member or use them yourself if you plan to continue your education. You may also transfer the funds to use for a grandchild’s education.
Pay student loans. You may use up to $10,000 of leftover Future Scholar funds to pay off the student loan debt of the beneficiary, their sibling or another family member. Perhaps one of your children attended a more affordable school, but your other child chose to pursue an advanced degree that required a student loan. This option could be the perfect solution.
Rollover the funds. You can use your leftover Future Scholar funds for the beneficiary’s retirement. If your Future Scholar account has been open for at least 15 years and the funds have been invested in the account for at least five years, you may be able to roll over up to a maximum lifetime limit of $35,000 to a Roth IRA that is owned by the designated beneficiary.
Withdraw the funds. You may withdraw your money at any time, even for non-qualified educational expenses. Withdrawals for non-qualified expenses are subject to a 10% federal penalty as well as income tax on the earnings portion of the withdrawal – not on the money you originally contributed. If your child receives a scholarship, you may withdraw up to the amount of the scholarship without penalty and pay taxes only on your earnings. We encourage you to consult a tax professional for more information about non-qualified withdrawals and any applicable penalty waivers.
FREEdom from student loan debt
As State Treasurer, I know how important it is for families to understand that they have the power to help their children avoid significant student loan debt. Future Scholar is designed to make saving for education as simple as possible so that you can help put your child on the path toward a successful, unburdened financial future. By opening a Future Scholar 529 account early and contributing as often as possible, you increase your account’s earning potential to fuel your child’s education journey.
To learn more about the Future Scholar 529 College Savings Plan and open an account, visit FutureScholar.com.
