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Working together to
help assets grow

Learn how loved ones and regular contributions can help build college savings.

Gifts from grandparents, godparents, extended family and friends, together with a systematic investment plan, can play a meaningful role in saving for college. The following hypothetical examples demonstrate the difference that everyone pitching in can make.

Talk to your financial adviser about resources that encourage everyone to contribute, such as our CollegeAmerica® “Dream big” gift certificate.

The potential benefit of working together
Just you: $48,329
$100 monthly investment for 18 years with no unscheduled contributions. Assuming an 8% average annual return, you’d have $48,329 when the first semester arrives.

J F M A M J J A S O N D x 18
= $48,329
$100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Working together: $68,802
$100 monthly investment for 18 years, but with two $250 contributions per year — perhaps with money the student received on birthdays and holidays. Assuming an 8% average annual return, you’d have $68,802 when the first semester arrives.

J F M A M J J A S O N D x 18
= $68,802
$100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
          $250           $250    
Spread the word
By supplementing your systematic investments with the gifts and contributions of others, you could have an additional $20,000 to meet qualified higher education expenses. With this in mind, consider:

  • Letting friends and relatives know that it's possible to contribute to a college savings plan you've established
  • Directing money from holiday and birthday gifts to the college savings account


Jump-start your savings

Parents and grandparents seeking to put sizable amounts to work can make large lump-sum contributions to a 529 college savings plan. For example, married parents or grandparents can contribute up to $28,000 per year to a loved one’s account without gift-tax consequences. And under a special election, they can combine multiple years into one contribution of up to $140,000 without gift-tax consequences.

How a sizable lump-sum contribution can grow
  Hypothetical account value at age 18 if your beneficiary is currently a ...
Assuming a one-time
investment of
12-year-old 6-year-old Newborn
$80,675 $130,169 $210,029

There is a separate contribution limit for each beneficiary. Gift-tax limits for the 2015 tax year may be higher. If you use the special election to give the maximum five-year amount, for example, and then give other gifts to the same individual during the next four calendar years, you may face gift-tax consequences. If the contributor dies within five years of making the election, the portion of that contribution allocable to the remaining years is included in the contributor’s estate for estate-tax purposes. Tax issues can be complicated, so talk to your tax adviser.

These examples assume an 8% average rate of return. Illustrations are not intended to represent an investments in a specific fund. Your investment experience will differ.

Regular investing does not ensure a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining.


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

Depending on your state of residence, there may be an in-state plan that provides tax and other benefits not available through CollegeAmerica. Before investing in any state’s 529 plan, you should consult your tax adviser. If withdrawals are used for purposes other than higher education, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax.

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® and sold through unaffiliated intermediaries.