ScholarShare Allows Tax-Deferred College Savings.The cost of college is escalating faster than most costs in our society. As a result, funding education has become one of the primary objectives of most financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against . Even if you are not a financial planner Financial Planner A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. , you might end up advising clients on the tax advantages of tax-deferred savings. Although the California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). ScholarShare program can meet both of these traditional objectives--often better than other alternatives--most CPAs have never heard of it. With AB530, the California Legislature created the Golden State ScholarShare Plan, and effective Oct. 4, 1999, the plan is available to California residents. NO CONTRIBUTION LIMITS The Golden State ScholarShare Plan permits full funding of projected college needs on a federal and California tax-deferred basis, with no income or annual contribution limitations. For the working stiff, this allows contributions of as little as $15 per month on payroll withholding Withholding Any tax that is taken directly out of an individual's wages or other income before he or she receives the funds. Notes: In other words, these funds are "withheld" from your wages. . For your wealthier clients, practical limitations are based on the beneficiary's age and projected school costs, but total contributions exceed over $150,000 and can be funded in a single year (although estate planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the would probably limit the single year contributions to $50,000 per contributor). If the funds are used for the beneficiary's higher education higher education Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. costs, which can include domestic schools' overseas studies, not only are the earnings tax deferred, but they will be taxed at the beneficiary's tax rate when used. Unlike other transfers to underage, potential spendthrifts, this one does not belong to the beneficiary beneficiary Person or entity (e.g., a charity or estate) that receives a benefit from something (e.g., a trust, life-insurance policy, or contract). A primary beneficiary receives proceeds from a trust or insurance policy before any other. unless used for school. When your 18-year-old is looking at his college fund, and trying to decide which would be a better investment -- Cal Tech or a new Corvette corvette, small warship, classed between a frigate and a sloop-of-war. Corvettes usually were flush-decked and carried fewer than 28 guns. They were widely employed in escorting convoys and attacking merchant ships during the great naval wars of the late 18th and -- and you suddenly realize it is legally his choice, the retention of ownership of the ScholarShare program has a lot of appeal. FUNDS SCHOOLS NATIONWIDE The maximum amount for any beneficiary is based on the most expensive California school and is calculated on five years of education including anticipated earnings, but the funds can be used at any school nationwide participating in Federal Title IV programs. This includes almost all regular colleges, universities and vocational schools. The funds can be used for tuition For tuition fees in the United Kingdom, see . Tuition means instruction, teaching or a fee charged for educational instruction especially at a formal institution of learning or by a private tutor usually in the form of one-to-one tuition. , fees, books, supplies, equipment, room and board. The beneficiary does not have to be a family member, and can even be the contributor (you can do this for yourself). Unused funds can be transferred to another member of the beneficiary's family, or the contributor can just change beneficiaries within that family. The funds can stay in the plan for either 10 years or until the beneficiary is age 45, and the plan administrator can even approve longer. If the money is never used for the educational purpose, or if the contributor wants the money back, the earnings are subject to a 10 percent penalty and taxation on withdrawal. There is a penalty exception on the death of the beneficiary. There also could be a penalty if contributions are made to both the Sec. 529 plan and an Educational IRA Ira, in the Bible Ira (ī`rə), in the Bible. 1 Chief officer of David. 2, 3 Two of David's guard. IRA, abbreviation IRA. . This program is a grandparent's delight. Multiple contributors can contribute to a single beneficiary and a single contributor can contribute to multiple beneficiaries, subject to the limit on the maximum amount in any beneficiary's plan. The contributions generally are considered transferred for estate tax purposes (but until there are some code changes, still may be subject to probate probate (prō`bāt), in law, the certification by a court that a will is valid. Probate, which is governed by various statutes in the several states of the United States, is required before the will can take effect. ). There are special provisions for a single year contribution of $50,000 to be claimed as five successive years of $10,000 gifts. TIAA/CREF TO MANAGE California has selected TIAA/CREF as the independent, professional plan manager. TIAA/CREF is the world's largest pension plan manager with over a quarter-trillion dollars under management and a history of excellent results. There are no front-or backend fees, and the management fees are limited to 8 percent (.008) of invested funds per year. Each contribution may be invested in any of four different categories, but cannot be switched after investing (subsequent investments can be in different funds). The four choices are based on regular TIAA/CREF funds and provide the following: 1. an equities choice; 2. a "socially-responsible" equities choice; 3. an age-balanced choice (emphasizing equities in the earlier years, but evolving to fixed yield in the later years); and 4. a fixed-yield choice. The California Golden State ScholarShare program is a solid tool for both the traditional working-class family and the family with estate planning problems. For more information, call the ScholarShare Telephone Center, (877) SAV-4 EDU (728-4338), or go to their Web site at www.scholarshare.com. John Levy John Levy (b. April 11, 1912, in New Orleans, Louisiana) is an African-American jazz double-bassist and businessman. In 1944, Levy left his hometown of Chicago, Illinois, and moved to New York City, New York, where he played bass for such renowned jazz musicians as Ben is a Walnut walnut, common name for some members of the Juglandaceae, a family of chiefly deciduous, resinous trees characterized by large and aromatic compound leaves. Species of the walnut family are indigenous mostly to the north temperate zone, but also range from Central Creek-based sole practitioner and a member of CalCPA's board of directors. He can be reached at jrlcpa@tpi.net |
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