The CollegeAmerica difference
Imagine having a powerful tool that helps you save for education in a tax-advantaged way while giving you the flexibility to pursue virtually any educational journey your child chooses. That’s exactly what a 529 savings plan like CollegeAmerica does.
Whether your child dreams of attending a four-year university, mastering a trade at a vocational school, pursuing seminary studies or diving into an apprenticeship program, savings in a 529 plan can help support their path.
Tax advantages
Every dollar you contribute to your 529 plan grows without federal taxes eating into your returns. When it's time to use those funds, you can withdraw them free from federal tax for qualified education expenses, such as tuition, required books and supplies. If withdrawals are used for purposes other than qualified education expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. States take different approaches to the income tax treatment of withdrawals. For example, withdrawals for K-12 expenses may not be exempt from state tax in certain states.
Supporting learning from kindergarten through career
The money in a 529 savings plan isn’t limited to four-year universities. Community colleges, seminaries, or trade schools or certain apprenticeship programs … any path the beneficiary chooses that involves professional training at an accredited institution could be eligible for tax-advantaged treatment in a 529 savings plan. Qualified expenses also include expenses for fees, books, supplies and equipment required for the participation of a designated beneficiary in certain apprenticeship programs.
And thanks to recent legislative changes, 529 accounts can now be used to cover a wider array of qualified educational expenses, including certain postsecondary credentialing program expenses and expenses in connection with enrollment or attendance at an elementary or secondary public, private or religious school (kindergarten through 12th grade) beyond just tuition.
Now, qualified K-12 expenses include (but are not limited to) tuition, curriculum materials, textbooks, instructional materials and online education materials up to a maximum of $10,000 incurred during the taxable year per beneficiary. Additionally, starting in 2026, the annual limit for K-12 expenses will increase from $10,000 to $20,000. However, note that not all states treat K-12 expenses as qualified expenses for state tax purposes.
Solutions for student debt and retirement planning
Your 529 plan goes beyond traditional education funding with two features that demonstrate its flexibility:
- Student loans: You can use up to a $10,000 lifetime limit per individual to pay down qualified student loans for a designated beneficiary or the designated beneficiary’s sibling.
- Retirement planning: Under certain circumstances, your beneficiary can roll over up to $35,000 from their 529 plan directly into a Roth IRA without taxes or penalties.§ This creates an incredible opportunity to jump-start retirement savings if education funding isn’t fully needed.
Flexible investment options
You decide how to invest your savings. You can select a target date fund, which automatically adjusts based upon the date you plan to use the funds. You may opt for a pre-built portfolio based upon a common goal. Or you can create a custom portfolio of individual mutual funds.
Low fees
CollegeAmerica’s fees are among the lowest for advisor-sold 529 college saving plans.ǁ
Low minimum investment
You can open an account for as little as $250 (the minimum investment per fund), but subsequent contributions can be as small as $50.¶ Imagine investing that amount when your child is a baby and contributing $50 monthly for the next 18 years. By the time your child is ready for college, you could be well on your way!
Proven investment track record
Capital Group has a solid track record, with experienced managers, funds with a history of good results and diverse investment strategies. Learn more about how our investment professionals manage your money through The Capital SystemTM.
