529 Education: Charles Schwab: 529 Basics

Invest for a college education with a 529 plan

Features of a 529 Plan

Tax advantages

Although your contributions are made with after-tax dollars, your investments grow tax deferred—potentially boosting your investment growth.
Withdrawals are federally tax-free when used for qualified education expenses.¹
Contribute a lump sum of up to $65,000 ($130,000 per couple) in a single year without incurring gift tax.²
For estate planning purposes—as an account holder you can move assets out of your taxable estate while maintaining ownership and control of the assets.

State tax benefit

Some states offer additional tax benefits to their residents for investing in their own state’s plan, or even another state’s plan.
Deductions vary greatly by state and should be considered as one of many factors along with a plan's investment options, performance, service and fees.

Control

The account holder maintains control over the account assets, and can withdrawal them at any time, with penalties.¹
The beneficiary of the account can be changed at any time to an eligible member of the original beneficiary's family without penalty.

Flexibility

Any US citizen or resident can open an account.
Friends and family can contribute to the account regardless of who opened it.
The funds can be used for a broad range of college expenses at most accredited two- and four-year colleges and universities, vocational-technical schools nationwide, and eligible foreign institutions.

Next steps to evaluating 529 Plans

Use our 529 State Tax Calculator to find out if your state offers a state tax benefit for contributing to a 529 plan and, if so, how much it might be.
Compare your state’s 529 plan with out-of-state 529 plans, considering additional factors such as performance, investment options, service and fees; since you can open a 529 plan sponsored by any state, no matter what state you live in.
Learn more about the Schwab 529 Plan or apply online in minutes or download an application.

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1. Qualified education expenses can include tuition, fees, books, supplies, equipment, room and board. The earnings portion of a non-qualified withdrawal is subject to federal and state income tax and a 10% penalty. State tax treatment of earnings may vary. Check with your tax advisor for rules on your state's tax treatment. The availability of tax or other benefits may be conditioned on meeting certain requirement such as residency, purpose for or timing of distribution, or other factors.
2. To qualify for the special gift tax exclusion; you need to file a gift tax return to treat the gift as if it were made in equal payments over five years. To avoid gift tax, you should make no additional gifts to the beneficiary during those five years.

Before investing, carefully consider the plan's investment objectives, risks, charges and expenses. This information and more about the plans can be found in the Schwab 529 Guide and Participation Agreement available from Charles Schwab & Co., Inc., and should be read carefully before investing. If you are not a Kansas taxpayer, consider before investing whether your or the beneficiary's home state offers a 529 plan that provides its taxpayers with state tax and other benefits not available through this plan. As with any investment, it is possible to lose money by investing in this plan.

The Schwab 529 College Savings Plan is available through Charles Schwab & Co., Inc., and is managed by American Century Investment Management, Inc. The Plan was created by the Kansas State Legislature under the provisions of Section 529 of the Internal Revenue Code and is administered by Kansas State Treasurer Dennis McKinney. Notice: Accounts established under the Schwab 529 Plan and their earnings are neither insured nor guaranteed by the State of Kansas, the Kansas State Treasurer, American Century Investments or Charles Schwab & Co., Inc. Accounts established under the Schwab 529 Plan are domiciled at American Century Investments and not Schwab.

American Century Investments® receives remuneration from fund companies, including PIMCO Funds, American Beacon Funds, Metropolitan West Asset Management, and Baron Funds® for recordkeeping, shareholder services and other administrative services associated with funds held in the Schwab 529 Plan portfolios.

American Century Investment Services, Inc., Distributor and Underwriter.

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Invest for a college education with a 529 plan

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