Grandparents | Capital Group

Here's what other grandparents are asking

Wise and wonderful: Grandparents can help fund a future

You've showered them with love — and spoiled them with ice cream. Now's your chance to provide them with the gift of education — and a good start on a future with less financial stress. Contributing to your grandchildren's 529 savings plans can help them navigate college and beyond.

  • Help your grandchild by reducing future student loan debt. 
  • Learn about the tax benefits of a 529 savings plan.
  • Understand how contributions of any amount can really add up over time.

Lower your tax burden and help your grandchildren. It's a win-win.

Smart estate planning can offer tax benefits for you now and lighten the load for your grandchild later. Find out how to incorporate a 529 savings plan into your financial plan — and be smart about how, when and how much to contribute.

  • Know how to contribute to your grandchild's 529 savings plan.
  • Understand the tax consequences and benefits of making contributions to a 529 savings plan.
  • Find out how contributions could affect your grandchild’s financial aid eligibility.  

Five lessons to teach your grandchildren about money

Age + experience = a wealth of knowledge. Teach your grandchildren good financial habits now, and you'll help them build a more secure future.

  • Sharing your financial wisdom can make a big difference in their lives.
  • Use activities that teach financial basics as a way to connect with your grandchildren.
  • Help them understand that creativity and drive matter, too.

Savings calculator

How much should you save? It depends on things like your income and the schools your grandchild has in mind. It’s fine to start small.

If I save       a month

Starting

Birth 18 years old

Estimated savings when my grandchild is 18 years old:

$0*

That's about 0% what you'll need for four years of in-state tuition fees.

* Assumes a hypothetical annual growth rate of 6%. For illustrative purposes. Not intended to portray an actual investment.


Ready to create a detailed plan?

Go to the college calculator
Savings if you started today
$ 0
Savings if you started after 0 years
Go to the college calculator

Give it a boost!

save taxes iconYearly bonus? Tax refund? Put part — or all — of it into your 529 education savings plan.

on track iconAsk for gifts toward your child’s 529 savings plan on birthdays and holidays.

on track iconHave your child join in the effort.
Lemonade stands and part-time jobs can help grow the funds, too.

It’s better to start somewhere and start now. Small savings can make a big difference over time.

CollegeAmerica 529 savings plan basics

Saving for education is like planning a big trip — getting to your destination takes a good plan. A 529 savings plan is a popular way to save for college.

A CollegeAmerica 529 savings plan makes it easy.

flexible icon

Flexible

Use a 529 savings plan for more than college tuition, including housing, required books and computer equipment.

taxes icon

Save on taxes

The earnings from your 529 savings plan investments are exempt from federal taxes, and in many cases, there is a state tax benefit as well. Tax-advantaged treatment applies to savings used for qualified education expenses. State tax treatment varies.

transfer icon

Transferable

You can transfer a 529 savings plan to a qualified family member of the original beneficiary.

Have more questions?

Wondering how to save for your grandchild’s education? Get answers about opening an account, making contributions and withdrawals, updating your beneficiaries and more.

How does a 529 savings plan account affect my taxes?

There’s no federal tax break for contributions. Some states offer their residents a tax break for contributions. Earnings in a 529 savings plan are free from federal income tax if withdrawals are used to pay for qualified education expenses. Otherwise, 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. You can contribute up to $15,000 ($30,000 for married couples) annually without gift tax consequences. Under a special election, you can contribute up to $75,000 ($150,000 for a married couple) at one time, accelerating five years' worth of contributions.

Who can establish a 529 savings plan account?

Any adult who is a U.S. citizen or legal resident can open a 529 savings plan. Only the account owner can make decisions affecting the account — like choosing the investments, taking withdrawals or changing the beneficiary. In addition, U.S. trusts, corporations, partnerships, nonprofit organizations and other entities may open an account.

How do I contribute to the account?

Once you’ve opened the account, you can set up an automatic investment plan, or contribute additional money online or by check anytime.

choose

CollegeAmerica 529 savings plan

You trust your doctor with your health and your mechanic with your car. You shouldn’t settle for anything less when you’re deciding where to invest your money.

Trusted by more than 1 million families nationwide, CollegeAmerica is the country’s largest 529 savings plan,1 with more than $66 billion invested.2

 
why us background image

We're helping more than 2.4 million future students pursue their dreams.3

  • Any adult who's a U.S. citizen or legal resident can open a CollegeAmerica 529 savings plan, regardless of income.
  • The earnings in a 529 savings plan are exempt from federal taxes if withdrawals are used for qualified expenses. And some states offer tax benefits as well.
  • CollegeAmerica fees are among the lowest in the industry.4
  • 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. State tax treatment varies.
  1. Largest by assets, according to the 1Q 2020 "529 College Savings Quarterly Update" from ISS Market Intelligence.
  2. As of March 31, 2020, CollegeAmerica AUM is $66.4.
  3. Number of accounts as of March 31, 2020, Strategic Insight.
  4. "529 College Savings Quarterly Fee Analysis," ISS Market Intelligence, 4Q 2019. CollegeAmerica’s fees were in the top quartile of 30 and 18 plans based on the average annual asset-based fees for national advisor-sold and fee-based advisor-sold 529 plans, respectively.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors, Inc. and sold through unaffiliated intermediaries. 

Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state's 529 plan, investors should consult a tax advisor. 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation. 

American Funds Distributors, Inc., member FINRA.

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.