529 Plan FAQs: Contributions, Withdrawals & Rules | ScholarShare 529 Skip to the main content > Accessibility Statement > Turn Animations Off: * * Workplace 529 * News * Español * Search * * Log in Search: Submit Log in * Why ScholarShare 529 * * Benefits of Our 529 * A Plan for Everyone * About Us * Learn and Plan * * How Our 529 Works * Compare Ways to Save * The Cost of College * Investment Options * * Compare Investment Options * Enrollment Year Investment Portfolios * Risk-Based Portfolios * Guaranteed Portfolio Option * Daily Price & Performance * Fees & Expenses * Resources * * Popular Resources * Report on Higher Ed * Planning Tools * FAQs * Gifting * Events & Webinars * Glossary * Children's Savings Accounts * Schedule an Appointment * Account Center * * How-tos * Forms * Open An Account * Workplace 529 * News * Español * Home * Frequently asked questions Frequently asked questions When it comes to making a financial decision, it's important to ask questions. Here are the answers to some of your most common ones. Explore By Topic * About 529 plans * Taxes * Withdrawals * Beneficiaries * Investments * Contributions * Financial aid * Open an account For Account Owners Read our how-tos Explore By Topic Jump To Topic * About 529 plans * Taxes * Withdrawals * Beneficiaries * Investments * Contributions * Financial aid * Open an account Most common ScholarShare 529 questions What if my child decides not to attend college? With your ScholarShare 529, you're never locked in. You'll always have access to several options for this money: * Your funds can be used to pay for a variety of eligible education expenses , including at any accredited college, university, apprenticeships, community college or postgraduate program in the United States—and even some schools abroad. 1 * Your 529 can be used for student loan repayment up to a $10,000 lifetime limit per individual. 1 * Your funds can be used to pay for K-12 qualified expenses - up to $20,000 annually can be used per student at a public, private, or religious elementary, middle, or high school. Qualified education expenses include curriculum, instructional materials, tutoring by approved professionals, standardized test and dual enrollment fees, and licensed educational therapies for students with disabilities.  Click here for more information on recent changes to qualified expenses. 2 * You can transfer the funds to another eligible beneficiary, such as another child, a grandchild, yourself or a friend. * If you just want the money back, you can withdraw the funds at any time. If funds are withdrawn for a purpose other than qualified higher education expenses, the earnings portion of the withdrawal is subject to federal and state taxes plus a 10% additional federal tax on earnings (known as the "Additional Tax"). Non-qualified withdrawals may also be subject to an additional 2.5% California tax on earnings. See the Plan Description for more information and exceptions. * Or you can always wait because the funds never expire , and often the choice to go to school is a delayed decision. So if your child changes their mind down the road, your savings will still be available. * Effective January 1, 2024, 529 funds may be rolled over to a Roth IRA in the name of the beneficiary of the 529 plan. State tax treatment of a rollover from a 529 plan into a Roth IRA is determined by the state where you file state income tax. There are conditions that must be met including the 529 plan must have been in existence for at least 15 years. You should talk to a qualified professional about how tax provisions affect your circumstances. * Pay for qualified expenses when enrolled in a recognized postsecondary credentialing program. Click here for more information on the recent changes to qualified expenses. 3 Footnotes * 1 Withdrawals for registered apprenticeship programs and student loans can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circumstances. Read about eligible education expenses. Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act. ↩ * 2 Withdrawals for K-12 qualified expenses can be withdrawn free from federal tax. For California taxpayers, any earnings portion of these withdrawals are subject to state income tax and an additional 2.5% California tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circumstances. ↩ * 3 Withdrawals for Recognized Postsecondary Credentialing Programs—including tuition, books, equipment, supplies for the enrollment or attendance, testing fees if required to obtain or maintain a Recognized Postsecondary Credential, fees for continuing education if required to maintain an Recognized Postsecondary Credentialing Program and therapies for students with disabilities—are exempt from federal income tax. Consult a tax professional for guidance. ↩ Click here for more information on recent changes to qualified expenses What if I move out of state or my child wants to go to school out of state? Your contributions will always be yours, and you do not need to be a resident of California to open, contribute to or use a ScholarShare 529. Your ScholarShare 529 can also be used for a range of qualified expenses in state, out of state and abroad. If you move to another state, you can keep your money invested and continue making contributions to your ScholarShare 529 account—no problem! Do I need a ScholarShare 529 account for each child? There's no cost associated with opening a ScholarShare 529 account or owning more than one account. You could open a different account for each child. You might do this to align investment strategies with the time frame each child will begin using the funds. For example, an older child's account could be more conservatively invested to help protect your contributions as they near college, whereas a younger child's account might be invested to balance growth and income strategies during a longer time frame. You may also prefer to pay college expenses first out of your highest growth account to maximize federal tax benefits and to encourage gift contributions from friends and family. Keep in mind: ScholarShare 529 allows you the flexibility to select multiple investment portfolios within each account. This offers you more control to manage risk on your terms. For example, adding the Guaranteed Portfolio Option can help ensure a portion of your college savings is principal-protected. Multiple accounts can also aid in estate planning by ensuring that college funds are allocated appropriately to each beneficiary upon the death of the account owner. But if you'd like to stick to one account, you can change any eligible beneficiary at any time and at no additional cost. Are ScholarShare 529 contributions deductible from federal tax? There is no federal income tax deduction for 529 plan contributions, regardless of where you live, or which 529 plan you participate in. Do I have to use my account at a California college or university? No. Your ScholarShare 529 funds can be used at any accredited university in the country—and even some abroad. This includes public and private colleges and universities, apprenticeships, community colleges, graduate schools and professional schools. 1 Up to $20,000 annually can be used toward K-12 qualified expenses. 2 In addition, your 529 can be used for student loan repayment up to a $10,000 lifetime limit per individual. 1 Review a list of qualifying expenses and the state tax treatment of withdrawals for these expenses in the Plan Description . Footnotes * 1 Withdrawals for registered apprenticeship programs and student loans can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circumstances. Read about eligible education expenses. Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act. ↩ * 2 Withdrawals for tuition expenses at a public, private or religious elementary, middle, or high school can be withdrawn free from federal tax. For California taxpayers these withdrawals are subject to state income tax and an additional 2.5% California tax. You should talk to a qualified professional about how tax provisions affect your circumstances. ↩ What are qualified higher education expenses? Qualified higher education expenses include tuition, certain room and board expenses, fees, books, supplies and equipment required for the enrollment and attendance of the beneficiary at an eligible educational institution. This includes most postsecondary institutions. When used primarily by the beneficiary enrolled at an eligible educational institution, computers and related technology such as internet access fees, software or printers are also considered qualified higher education expenses. Qualified higher education expenses also include certain additional enrollment and attendance costs at eligible educational institutions for any beneficiary with special needs. Qualified higher education expenses also include (a) qualified expenses in connection with enrollment or attendance at a K-12 primary or secondary public, private or religious school (up to a maximum of $20,000 of distributions per taxable year per beneficiary from all Section 529 programs) 1 ; (b) expenses for fees, books, supplies and equipment required for the participation of a beneficiary in a certified apprenticeship program 2 ; and (c) qualified expenses related to enrollment in a recognized postsecondary credentialing program ; and, amounts paid as principal or interest on any qualified education loan of either the beneficiary or a sibling of the beneficiary (up to a lifetime limit of $10,000 per individual). 2 (d) make student loan payments. Review the Plan Description for additional information, including the state tax treatment of withdrawals for these expenses. Footnotes * 1 Withdrawals for tuition expenses at a public, private or religious elementary, middle, or high school can be withdrawn free from federal tax. For California taxpayers these withdrawals are subject to state income tax and an additional 2.5% California tax. You should talk to a qualified professional about how tax provisions affect your circumstances. ↩ * 2 Withdrawals for registered apprenticeship programs and student loans can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circumstances. Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act. ↩ For Account Owners Read our how-tos All Frequently Asked Questions About 529 plans What is a 529 college savings plan? A 529 plan is a tax-advantaged savings plan designed to help families save for college and a range of other qualified education expenses. 529 refers to Section 529 of the Internal Revenue Code. Read more here: Benefits of a 529 How does a 529 college savings plan compare to other college savings options? ScholarShare 529 provides a unique set of benefits that can mean more flexibility and growth potential, including: * Tax-free qualified withdrawals * Low fees and expenses * Smart and easy to choose investment options * Favorable financial aid treatment * Use for a wide range of education expenses and programs—in California and around the world Get more details and compare savings options . What if my child decides not to attend college? With your ScholarShare 529, you're never locked in. You'll always have access to several options for this money: * Your funds can be used to pay for a variety of eligible education expenses , including at any accredited college, university, apprenticeships, community college or postgraduate program in the United States—and even some schools abroad. 1 * Your 529 can be used for student loan repayment up to a $10,000 lifetime limit per individual. 1 * Your funds can be used to pay for K-12 qualified expenses - up to $20,000 annually can be used per student at a public, private, or religious elementary, middle, or high school. Qualified education expenses include curriculum, instructional materials, tutoring by approved professionals, standardized test and dual enrollment fees, and licensed educational therapies for students with disabilities.  Click here for more information on recent changes to qualified expenses. 2 * You can transfer the funds to another eligible beneficiary, such as another child, a grandchild, yourself or a friend. * If you just want the money back, you can withdraw the funds at any time. If funds are withdrawn for a purpose other than qualified higher education expenses, the earnings portion of the withdrawal is subject to federal and state taxes plus a 10% additional federal tax on earnings (known as the "Additional Tax"). Non-qualified withdrawals may also be subject to an additional 2.5% California tax on earnings. See the Plan Description for more information and exceptions. * Or you can always wait because the funds never expire , and often the choice to go to school is a delayed decision. So if your child changes their mind down the road, your savings will still be available. * Effective January 1, 2024, 529 funds may be rolled over to a Roth IRA in the name of the beneficiary of the 529 plan. State tax treatment of a rollover from a 529 plan into a Roth IRA is determined by the state where you file state income tax. There are conditions that must be met including the 529 plan must have been in existence for at least 15 years. You should talk to a qualified professional about how tax provisions affect your circumstances. * Pay for qualified expenses when enrolled in a recognized postsecondary credentialing program. Click here for more information on the recent changes to qualified expenses. 3 Footnotes * 1 Withdrawals for registered apprenticeship programs and student loans can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circumstances. Read about eligible education expenses. Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act. ↩ * 2 Withdrawals for K-12 qualified expenses can be withdrawn free from federal tax. For California taxpayers, any earnings portion of these withdrawals are subject to state income tax and an additional 2.5% California tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circumstances. ↩ * 3 Withdrawals for Recognized Postsecondary Credentialing Programs—including tuition, books, equipment, supplies for the enrollment or attendance, testing fees if required to obtain or maintain a Recognized Postsecondary Credential, fees for continuing education if required to maintain an Recognized Postsecondary Credentialing Program and therapies for students with disabilities—are exempt from federal income tax. Consult a tax professional for guidance. ↩ Click here for more information on recent changes to qualified expenses What if I move out of state or my child wants to go to school out of state? Your contributions will always be yours, and you do not need to be a resident of California to open, contribute to or use a ScholarShare 529. Your ScholarShare 529 can also be used for a range of qualified expenses in state, out of state and abroad. If you move to another state, you can keep your money invested and continue making contributions to your ScholarShare 529 account—no problem! Do I have to use my account at a California college or university? No. Your ScholarShare 529 funds can be used at any accredited university in the country—and even some abroad. This includes public and private colleges and universities, apprenticeships, community colleges, graduate schools and professional schools. 1 Up to $20,000 annually can be used toward K-12 qualified expenses. 2 In addition, your 529 can be used for student loan repayment up to a $10,000 lifetime limit per individual. 1 Review a list of qualifying expenses and the state tax treatment of withdrawals for these expenses in the Plan Description . Footnotes * 1 Withdrawals for registered apprenticeship programs and student loans can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circumstances. Read about eligible education expenses. Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act. ↩ * 2 Withdrawals for tuition expenses at a public, private or religious elementary, middle, or high sc