Future Scholar Means Future Control with 529 Flexibility
There’s no denying that we live in uncertain times, making it impossible to predict what the future will bring. But having a smart plan can help you influence just how bright the future will be for you and your family.
If your vision for your family includes a child’s future education, investing in the Future Scholar 529 Plan will provide the flexibility you need to help you achieve that important goal
Future Scholar is the only 529 plan sponsored by the State of South Carolina and one of the best in the nation – regularly recognized among the top 15 percent of state plans nationwide. And while there are numerous benefits associated with the Future Scholar 529 College Savings Plan, flexibility may just be the most appealing benefit of all.
What do we mean by flexibility? Well, take a look for yourself:
1. Account growth can be used tax-free
Very few investment vehicles in the United States allow you to invest money and grow it tax-free. A Future Scholar 529 plan is one of them.
Future Scholar plans are funded using after-tax dollars. Once contributed to an account, any growth accumulates tax-free. And with no federal or state income taxes impacting your account growth year after year, you’re able to use 100 percent of the funds in your account for qualified educational expenses. What’s more, withdrawals are also completely tax-free when the money is used for qualified expenses.
There’s no minimum required to open a Future Scholar account, and as of July 1, 2020, the maximum account balance limit is a hefty $520,000 per beneficiary, easily meeting the needs of most account holders.
2. Versatility of Funds
There’s a common misconception that 529 funds can only be used for tuition and other applicable fees, but Future Scholar offers far more versatility.
In addition to tuition and fees, the money you save in your 529 college savings plan can be used for the following:
- Room and board. Whether it's on-campus student dorms or an off-campus apartment, you're able to use 529 funds to pay for qualified housing and student meals. Future Scholar can help offset some of the burdens of expensive room and board in bustling college towns.
- Books, supplies, and equipment. From textbooks and software to school supplies and computers, you can withdraw funds to cover basic educational expenses.
There’s also versatility in where you use the money in your Future Scholar account. The funds can be used at any eligible educational institution in the United States – in-state or out-of-state – as well as at select international schools. Options include both two-year and four-year public and private colleges, graduate programs, and certain vocational and technical schools.
3. Plenty of Withdrawal Options
By now, you're aware of the fact that you can withdraw funds for qualified expenses and avoid paying income tax, but what about extenuating circumstances?
- What if my student doesn’t go to college? In this case, you have a few different choices. You can always keep the account open in case the student one day decides to attend college which could include a technical college or qualifying trade school. You could transfer the account to another beneficiary – even a future grandchild! And you can always withdraw funds, though you may be subject to taxes and a 10% federal penalty.
- What if my student performs well and gets an academic or athletic scholarship? Good news! There’s no penalty for high-performing students. You can withdraw up to the amount of the scholarship and simply pay income taxes only on the earnings portion of the withdrawal. For example, if your child were to receive a $25,000 scholarship, you could withdraw that amount from the account without penalty. And if $15,000 of the funds were direct contributions, you would only be taxed on the $10,000 growth.
Future Scholar: The Flexible Choice for South Carolinians
We understand the enormous importance of saving for the cost of a college education – particularly in the current environment of rising tuition and fees. But we also know that plans change, circumstances evolve, and the future doesn’t always perfectly mirror current expectations. That’s why we’ve designed Future Scholar 529 college savings plans to be as flexible as possible and put you in control.
Interested in learning more about Future Scholar and how you can become one of the 175,000 families who use our plan to save for college? Click here to find out more.