529 California

Section 529 of the Internal Revenue Code (IRS) provides you the best opportunity to save for the future collegiate expenses of your child. The law for educational savings has been in place in the USA since 1986, but the more friendly law was passed by Congress in 1996, which was later amended twice; last in 2002. All 529 prepaid college plans in California fall under these laws.

Today the law gives more options to its citizens to invest a huge amount without paying any tax on the earnings from the savings. However, the particular state laws depend a lot on their own legislature and their respective decisions. Under section 529 of IRS, all the states which implement the 529 college plans can make a choice of their own regarding the laws on taxes and the kind of plan they want to adopt.

Basically there are two types of 529 college education plans: the prepaid college plans and the savings college plans. All 50 states of US offer at least one of these plans; that is, either a prepaid college plan or a savings college plan, or both of them.

There is only one state that offers only prepaid college plans. It is Washington.

33 States that offer only the savings plans include: Alaska, Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Utah, Vermont and Wyoming.

16 States that offer both the prepaid as well the savings plans include: Alabama, Colorado, Florida, Illinois, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Mexico, South Carolina, Tennessee, Texas, Virginia, West Virginia and Wisconsin.

California's 529 College plan California offers you the Golden State Scholarshare College Savings Trust. The Highlights are: · 2 age-based asset allocation options · 6 static portfolios · A 100% equity option · A social choice portfolio · $300,000 is the cumulative contribution limit

It is a guaranteed investment option, thus you can say that by buying a ScholarShare college plan, you get some good elements of prepaid college plans in California as well.

The prepaid plan allows one to acquire tuition credit, at the rates of today, that can be used in the future. But there are some disadvantages of buying a prepaid plan:

· Enormous limitations and restrictions are placed on state to state transfers. · Many benefits are non-transferable in cases of transfer to private institutions, and you will also lose a considerable amount when paying the penalties and other fees.

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