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529 College Savings Plans in South Carolina

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by Javier Simon Updated

South Carolina sponsors one direct-sold and one advisor-sold 529 college savings plan. Both allow South Carolina families to deduct up to $426,000 from their state tax return, making the Palmetto State one of the most generous in the country. However, both plans offer investment menus that are not as vast as those in other states’ plans. Still, the direct option has some of the lowest fees we’ve seen. You can also find a financial advisor in your area to guide you through opening the advisor-sold option and create a personalized college savings blueprint.

Plan Name Program Type How to Enroll Fees
Future Scholar: South Carolina 529 College Savings Plan Future Scholar: South Carolina 529 College Savings Plan logo Read Review College Savings Plan Direct-Sold 0.07% - 0.25%
Future Scholar Advisor Plan Future Scholar Advisor Plan logo Read Review College Savings Plan Advisor-Sold 0.34% - 2.04%

Future Scholar: South Carolina 529 College Savings Plan

Future Scholar: South Carolina 529 College Savings Plan

The Future Scholar 529 College Savings plan helps families invest in their children’s educational futures now even as college costs continue to rise. Any U.S. citizen can open an account and over the lifetime of the account contribute up to $426,000—a high level compared to plans sponsored by other states. South Carolina families can also deduct up to $426,000 from their state taxable income, which is substantial compared to the 529 college savings plans other states sponsor. The plan offers a variety of investment options, but you don’t have to be an experienced investor to open one. Your options include age-based portfolios, which automatically change their asset allocation, or the mix of stocks, bonds and other securities invested, in order to become less risky as your child gets closer to college age.

How Do I Enroll in South Carolina’s 529 Plan?

You can open an account with the Future Scholar 529 direct plan online or you can request that an enrollment kit get mailed to you. You’d need the following information for yourself and your beneficiary: names, address, Social Security number, dates of birth and bank account and routing number if making an initial payment electronically.

And unlike several 529 plans sponsored by other states, you don’t need a minimum contribution to open an account. You decide how much you want to start with. 

How Much Does South Carolina’s 529 Plan Cost?

With the exception of the FDIC-insured Bank Deposit account, each investment portfolio charges a total annual asset-based fee that is factored out of your balance. The total fee currently ranges from 0.07% to 0.25%, which makes Future Scholar direct among the most fee-friendly we’ve seen across the country. 

Tax Benefits of 529 College Savings Plans

South Carolina taxpayers can deduct up to the contribution limit from their state-taxable income per year. That’s a sizable maximum of $426,000— a threshold rarely met among states that offer state tax benefits for engaging in a 529 college savings plan. 

However, the plan is open to all U.S. citizens and resident aliens who are 18 or older. Any account holder who contributes to the plan would enjoy tax-exempt growth. This means Uncle Sam won’t touch the money you earn in the market as long as it’s invested, and you can take advantage of compound interest. You’re also free from taxation when you take the money out if you use the funds to pay for 529 plan qualified expenses such as tuition. 

However, you may face some tax-related pitfalls when you don’t use your 529 plan as intended. When you take money out of the plan to fund anything that’s not a qualified higher education expense, you’ve made a nonqualified withdrawal. It may be subject to federal income tax at your rate and a 10% penalty. You may also have to pay back previously claimed income-tax deductions. 

In a few situations, you can get the penalty waived. Speak to a financial advisor or tax professional to discuss how a nonqualified withdrawal may impact you based on your unique situation. You can also discuss additional tax benefits that may apply to your unique circumstances.

What Are My Investment Options?

The Future Scholar 529 plan offers a variety of investment portfolios with underlying mutual funds that leading investment firms manage. Those who are new to investing and want a hands-off approach to the college savings process may be interested in opening an account with an age-based portfolio. These options change their asset allocation over time. The general objective is for the portfolio to become more conservative automatically as your child gets closer to college age by investing less in traditionally riskier options like stock funds and more in generally safer investments like bond and money market funds. 

However, you can put these age-based portfolios on three tracks based on your risk level: conservative, moderate and aggressive. So if you have a high risk tolerance, you may choose the aggressive option. This portfolio would invest a significant portion of your contributions in stocks even when your child gets older in order to aim for strong growth by taking on more risk. 

If you’re not sure what your risk tolerance is, you can use our asset allocation calculator to figure out an investment mix that may reflect your goals. You can use that information to explore the plan’s target portfolios. Each invests in a variety of securities based on a specific risk level that ranges from conservative to aggressive. In addition, you can also invest in one or more individual portfolios. Each of these options invests in a single underlying fund. 

If your risk tolerance is low or you’ve been saving for a while and believe it’s time to protect what you’ve earned, you may be interested in the FDIC-insured Branch Banking and Trust (BB&T) interest bearing account.

And unlike plans that other states sponsor, the South Carolina direct option also allows you to invest an individual portfolio that invests entirely in one exchange-traded fund (ETF). These types of funds typically have lower fees than mutual funds. 

How Do I Withdraw Money from the Future Scholar 529 Plan?

You can request a 529 plan withdrawal by logging on to your account. You can make payments to yourself, your beneficiary or directly to the eligible educational institution you’re funding. You can make the payment via check, wire transfer or ACH direct deposit. Fees may apply to wire transfers.

Future Sccholar Advisor Plan

Future Scholar Advisor Plan

The advisor-sold version of South Carolina’s 529 college savings plan offers slightly more investment options but with higher overall fees. However, this option provides professional guidance from a qualified financial advisor. This individual can work with you to tailor an investment portfolio and a college savings road map designed for your unique financial circumstances and goals. 

How Do I Enroll in the Future Scholar 529 College Savings Plan Advisor Program?

You can enroll in the program through a financial advisor, who would navigate you through the enrollment and investment selection process. The individual would then help build a long-term, personalized college savings initiative. 

How Much Does the South Carolina Advisor 529 Plan Cost?

Each portfolio in the plan with the exception of the FDIC-insured option, carries a total annual asset-based fee which factors in fees for program management, state administration and marketing. This total fee currently ranges from 0.34% to 2.04% depending on which portfolio you choose, as well as its share class or pricing alternative as it’s known in this plan. You can choose from the available share classes for any portfolio. For example, you can invest in an aggressive growth static portfolio for share Class A. Or you can pick the same for share Class C. The fees will vary for each, even though you’re investing in the same exact portfolio.

The Future Scholar advisor program is known as an advisor-sold 529 plan; therefore, it may charge additional fees not usually found in direct-sold plans in order to compensate the advisor and other intermediaries involved with managing the plan. 

These may include initial sales charges and contingent deferred sales charges, which can vary based on your choice of portfolio and share class. Sales charges typically are made to compensate advisors. An initial sales charge is taken from each contribution, and a deferred sales charge typically kicks in when you withdraw money from the plan within a certain time period after making a contribution. But the extent of these sales charges and when you’d be charged depends on which share class you choose for your portfolio.

Below are some details about how fees break down based on different share classes. 

  • Maximum Initial Sales Charge (Pricing Alternative A, AG, AX): 3.75%
  • Maximum Deferred Sales Charge: (Pricing Alternative C): 1.00%
  • Pricing Alternative E and I: No Sales Charges 

However, the best thing to do is to speak with your financial advisor about which investment option and corresponding share class works for you, as well as all fees involved— especially advisor fees. Some of these can be reduced or waived based on certain circumstances. For example, initial sales charges —which are taken from contributions—decrease as your balance increases.    

Tax Benefits of South Carolina’s Advisor 529 Plan?

When you invest in the Future Scholar Advisor Plan, you get the same tax benefits you do under the direct-sold option. This means your contributions would grow tax-exempt as long as they’re invested and your withdrawals would be tax-free as long as you use them on qualified higher education expenses. 

However, a professional advisor would be able to help you make the most out the many tax perks that all 529 College Savings plans have to offer such as estate-tax benefits. In addition, 529 plans offer several opportunities to give money to students and avoid gift tax.

Your advisor can also help you weigh the pros and cons of any non qualified withdrawal, should the need for one arise. However, it’s always best to avoid one. 

What Are My Investment Options?

The Future Scholar Advisor-sold College Savings Plan offers the same types of portfolio options as its direct-sold counterpart. You can invest in an age-based portfolio that adheres to your risk level. You can also invest in risk-based target portfolios and individual portfolios including one FDIC-insured option. 

Across the board, the advisor-sold plan offers a few more portfolio options than the direct one including ones that are slightly more diversified. For the most part, however, both plans share similar types of portfolios with similar asset-allocations and goals. Underlying funds could vary across portfolios. You should examine all investment options carefully with your advisor to determine which portfolio option or options are best for you based on your unique circumstances. 

How Do I Withdraw Money from the South Carolina Advisor 529 Plan ?

You can request a withdrawal by logging on to your account or by calling the plan directly. You can direct payments to yourself or the educational institution in which your beneficiary is enrolled. However, you have to download and mail in a withdrawal request form and mail it in if you want the withdrawal sent to your beneficiary. You can also contact your financial advisor. 

If you’re not sure how to seek the right advisor for you, you can use our SmartAsset Advisor matching tool. It asks you some basic questions to direct you to financial advisors in your area who specialize in certain financial facets like helping families save for their children's college education. You can also compare their qualifications and credentials.