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Charles Schwab Lowers Fees in Schwab 529 College Savings Plan

SCHW | May 19, 2015

Charles Schwab today announced that it is reducing fees in the Schwab 529 College Savings Plan effective July 17, 2015. The actively-managed portfolios are being reduced by an average of 20 percent, with total expense ratios now ranging from 0.41 to 1.01%, down from 0.41 to 1.34%. The passive index portfolios will decrease 45 percent to a total expense ratio of 0.30% down from 0.55%. The fee reductions are aimed at giving parents, relatives and friends an even more cost-effective way to save for a child’s higher education, a top priority for many investors as college expenses continue to rise.

“Costs can have a significant impact on long term investment performance, which is why Schwab is committed to keeping costs low for investors,” said Doug Hanson, Charles Schwab Vice President, Asset Management Client Solutions. “Our new 529 program fees are very competitive compared to the rest of the industry, and the less investors pay in fees, the more savings they can keep in their account. Considering the costs of higher education today, we know every dollar counts for clients of Schwab’s 529 Plan.”

Investors can open a Schwab 529 account online or by phone, through Schwab financial consultants, or through Registered Investment Advisors (RIAs) that custody client assets with Schwab. Schwab 529 plan clients also have access to customer support 24 hours a day, seven days a week.

The Schwab 529 College Saving Plan is sponsored by the State of Kansas but available to residents of any state (please consider any potential state tax benefits offered by your own state’s plan if you are not a Kansas resident). The Plan’s manager is American Century Investment Management, Inc. The Schwab 529 Plan has no account opening, maintenance, or enrollment fees and a minimum opening deposit of $25 (other account fees, fund expenses, and brokerage commissions may apply).* The Plan offers seven different actively managed portfolios and six different index portfolios designed to be diversified across asset classes to meet the full spectrum of investor profiles from conservative to aggressive and longer to shorter time horizons based on the beneficiary’s age. The portfolios include a combination of Schwab and third party funds.

A 529 plan provides a number of benefits for people looking to save for a child’s college expenses, including:

Tax-deferred growth potential – With a 529 plan, any earnings accrue free from federal income tax so an investment can grow at an even faster pace than it would in a taxable account.
Tax-free withdrawals – Investors pay no federal taxes on withdrawals as long as they are used for qualified education expenses.
High contribution limits – A 529 plan allows for much higher contributions than other education savings options.

“I want to thank Charles Schwab for lowering these fees for account holders,” said Kansas State Treasurer Ron Estes. “These changes will help support families in their efforts to start saving now to meet the challenge of paying for their child’s future education. It’s great to work with a firm who understands that cost is important to investors and provides excellent customer service along with a commitment to seeking solid investment performance.

More information about the Schwab 529 College Savings Plan and available investment options can be found online at Schwab.com/529.

About Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better future. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube, and LinkedIn.

*See the Schwab 529 College Savings Plan Guide and Participation Agreement for comprehensive details on fees and expenses.

DISCLOSURES:

Before investing, carefully consider the plan’s investment objectives, risks, charges and expenses. This information and more about the plan can be found in the Schwab 529 Guide and Participation Agreement, available from Charles Schwab & Co., Inc. at schwab.com/529 or 1-800-435-4000, and should be read carefully before investing.

If you are not a Kansas taxpayer, consider before investing whether your or the beneficiary’s home state offers a 529 plan that provides its taxpayers with state and other benefits not available through this plan. As with any investment, it is possible to lose money by investing in this plan.

The earnings portion of non-qualified withdrawals is subject to federal and state income taxes and a 10% federal penalty tax.

The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors. Notice: Accounts established under the Schwab 529 Plan, and their earnings, are neither insured nor guaranteed by the State of Kansas, the Kansas State Treasurer, American Century Investments, or Charles Schwab & Co., Inc. American Century Investment Services, Inc., distributor and underwriter. The Schwab 529 College Savings Plan is available through Charles Schwab & Co., Inc. and is managed by American Century Investment Management, Inc. The plan was created by the Kansas State Legislature under the provisions of Section 529 of the Internal Revenue Code and is administered by Kansas State Treasurer Ron Estes. Notice: Accounts established under the Schwab 529 College Savings Plan and their earnings are neither insured nor guaranteed by the State of Kansas, the Kansas State Treasurer, American Century Investments®, or Charles Schwab & Co., Inc. Accounts established under the Schwab 529 College Savings Plan are domiciled at American Century Investments and not Schwab.

American Century Investment Services, Inc., Distributor and Underwriter

American Century Investments receives remuneration from fund companies, including Baird Funds, American Beacon Advisors, Metropolitan West Management, LLC, Baron Funds, and JP Morgan Funds for recordkeeping, shareholder services, and other administrative services associated with funds held in the Schwab 529 College Savings Plan portfolios.

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE:SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

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