featured graphic for California State Treasurer Fiona Ma

Treasurer Ma’s bill to protect ScholarShare 529 accounts goes to the Governor’s office

Legislation that would protect ScholarShare 529 college savings accounts from the enforcement of money judgements by creditors was passed by the Senate on concurrence and now heads to the Governor’s desk for potential signature. The bill, SB 898, is authored by State Senator Bob Wieckowski, D-Fremont, and sponsored by State Treasurer Fiona Ma, who chairs the Scholarshare Investment Board.

“This legislation helps preserve the college dreams of young people whose families may fall on hard times because of the massive economic problems caused by COVID-19,” said Treasurer Ma. “College savings are needed now more than ever and those savings should be encouraged and protected.”

“The skyrocketing cost of attaining a college degree is a great hurdle for many families,” said Senator Bob Wieckowski (D-Fremont). “But families see the long-term value in post-secondary education for their children. SB 898 ensures ScholarShare 529 accounts are protected from creditors if a family falls on hard times. That’s why I am proud to author this important legislation sponsored by State Treasurer Ma and pleased to see it pass with bipartisan support.”

SB 898 adds ScholarShare 529 college savings plan accounts to the list of exemptions under California bankruptcy law, ensuring that college savings are protected from judgement claims by creditors. For the first and second year prior to the filing of the money judgement, the exemption amount will be set at a maximum of $15,000.

Currently, if an account holder is faced with a judgement, the creditor is allowed to attach the account to satisfy their judgement, a result that can be devastating to the family and their loved ones. By comparison, retirement plans are protected from creditor claims.

“Opening up a ScholarShare 529 account is a great way for parents, grandparents, and other relatives of young people to give their student a big assist in going to college, where tuition and other expenses have soared in recent years,” said Treasurer Ma.

Created in 1999, ScholarShare 529 accounts provide families with tax-deferred growth and withdrawals free from state and federal taxes when used for qualified higher education expenses, such as tuition and fees, books, certain room and board costs, computer equipment and other required supplies.

ScholarShare 529, California’s college savings plan, is one of only four plans throughout the nation to receive a gold rating by Morningstar.

This article was released by the California State Treasurer’s Office.