Invest in Their Future: College Costs and Funding Options

1. Putnam 529 for America Invest in their future

2. College costs are rising at a pace faster than inflation Source: “Trends in College Pricing Data,” The College Board, 2018. Tuition is represented by the average cost of private non-profit four year tuition and public non-profit four-year tuition.

3. The first step in planning is knowing how much you may need Four years of tuition and fees (including room and board) $39,880 $141,040 Among the Class of 2018, 69% of college students took out student loans The average monthly student loan payment (among those not in deferment) = $393 Public college (in-state) Private college Source: Student Loan Hero, 2019.

4. Attending college still offers life-long benefits Higher earnings Median weekly earnings by education level, 20181 Lower unemployment2 More civic Involvement % individuals who perform unpaid volunteer activities, among adults age >25 in 20153 Healthy lifestyle Among adults age 25 to 34 who reported exercising vigorously at least once a week in 20144 Sources: (1) College Board Education Pays 2016; U.S. Census Bureau, Income, Poverty, and Health Insurance in the United States, 2015, Table PINC-03; Internal Revenue Service, 2014; Davis et al, 2015 (2) U.S. Census Bureau, Basic Monthly Current Population Survey, January through December, 2005, 2010, and 2015; calculations by the authors. https://www.bls.gov/opub/ted/2018/unemployment-rate-2-1-percent-for-college-grads-4-3-percent-for-high-school-grads-in-april-2018.htm?view_full (3) Bureau of Labor Statistics, Volunteering in the United States 2015 (4) NCHS, National Health Interview Survey, 2014; calculations by the authors

5. How are families actually paying for college?Many sources exist to help fund expenses How the typical family pays for college, funding source share, year over year Before taking loans, consider options like savings, current income, scholarships, grants, gifts, and tax credits to help reach your goal. Source: "How America pays for college,“ SallieMae, 2018.

6. Tax credits for education are available, if you qualify American Opportunity Tax Credit (AOTC) • A credit up to $2,500 for each eligible student • The credit is not available to taxpayers with more than $90,000 in income or couples with more than $180,000 Lifetime Learning Credit • A credit up to $2,000 per tax return • The credit is not available to taxpayers with income of more than $56,000 ($112,000 for couples) Be mindful of how these tax credits work in conjunction with other college savings programs. Basic rules require that taxpayers cannot use multiple tax benefits for the same college expense. Student Loan Interest Deduction • A deduction for paying interest on a student loan that can reduce the amount of income subject to tax by up to $2,500 • This deduction is not available to taxpayers with income of more than $80,000 ($160,000 for couples)

7. 529 plans offer tax-free growth and withdrawals for all stages of learning Allow for tax-free growth and withdrawals • No federal income taxes on earnings while the account is invested • No federal income taxes when the money is withdrawn to pay for qualified expenses • Non-qualified withdrawals subject to income taxes and 10% penalty on earnings • Contributions made after-tax Qualified Expenses • Proceeds from an account can be used at any accredited college to pay for tuition, fees, room and board, books, and other qualified expenses • The Tax Cuts and Jobs Act broadened use of funds: Up to $10,000 per year per student may be used to pay for tuition at elementary or secondary public, private, or religious schools No income or age limits • May contribute regardless of income level and age of beneficiary • Annual contribution limit $15K single/$30K married filing jointly • Special exclusion allows for five years of gifts to be contributed at once

8. Savings grow faster because the account is not taxed $500 monthly contributions at a hypothetical 6% annual growth rate $193,677 Hypothetical 529 account value $163,477 $81,940 Hypothetical taxable account value $34,885 $75,007 $33,446 5 YEARS 10 YEARS 18 YEARS This example assumes contributions of $500 per month, a hypothetical 6% nominal rate of return compounded monthly with an effective return of 6.17%, and a 28% tax bracket for the taxable account. Performance shown is for illustrative purposes and is not related to an actual investment. Regular investing does not ensure a profit or protect against loss in a declining market. Capital gains, exemptions, deductions, and local taxes are not reflected. Certain returns in a taxable account are subject to capital gains tax, which is generally a lower rate than ordinary income tax rates and would make the investment return for the taxable investment more favorable than reflected on the chart. Investors should consider their personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision. These may further impact the results of the comparison.

9. You control the account • Owner controls the assets for life of the account • Control will not shift to the child at age of majority, unlike custodial accounts (UGMA/UTMA) • Investment exchanges allowed twice per calendar year or upon change of beneficiary • Beneficiary can be changed at any time • No tax consequences to change the designated beneficiary to another “member of the family”

10. Additional 529 plan flexibility gives peace of mind Tax-free rollovers from one 529 plan to another • Allowed once every 12 months or upon change of a beneficiary • UGMAs may be rolled into a 529 plan for tax-free growth of assets • Still considered a irrevocable account —beneficiary will become owner at age of majority • Taxes on UGMA account must be paid on earnings prior to rollover Options if the child does not attend college • Change beneficiary to another member of the family • Change beneficiary to your self to continue education • Withdraw the funds for non-qualified use and pay taxes on earnings portion plus 10% penalty • No penalty for withdrawal due to death, permanent disability, receipt of a scholarship or tuition waiver, or attendance at a U.S. military academy Investment changes allowed twice per calendar year or when the beneficiary is changed on an account.

11. Comparing 529 plans to the traditional ways to save

12. Financial aid considerations when saving for college 529 plans receive favorable treatment for federal financial aid as an asset of the parent *Some colleges have their own methodology to award financial aid from sources outside of the federal government Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply. Withdrawals for qualified higher education expenses subject to tax if the American Opportunity Credit Scholarship or Lifetime Learning Credit is claimed for same expenses. If withdrawing funds for qualified higher education expenses from both a 529 account and a Coverdell Education Savings Account, a portion of the earnings distribution may be subject to tax and penalty on amounts that exceed qualified higher education expenses. Read the offering statement for details.

13. Financial aid considerations when saving for college Here’s a simplified example of the impact of a parent-owned 529 account You file the FAFSA aid application when your child is a senior in high school. Let’s say you’ve exceeded the asset protection allowance and have a 529 savings account with $20,000 in it, of which $10,000 represents your original contribution and $10,000 is earnings. And although the $5,000 withdrawal brought $2,500 of excluded earnings with it, none of it will be counted as income on the FAFSA. The federal aid formula is more complicated than what is described here, but this gives you a general idea of how to calculate impact. Source: Savingforcollege.com

14. Make the most of your investments

15. Start early, contribute often The Jones family starts saving today, contributing $340 every month $163,154 $73,440 $89,714 Account value after 18 years Total contribution Earnings The Smith family waits 10 years to start saving, contributing $1,219 every month $163,154 $117,024 $46,130 Account value after 8 years Total contribution Earnings This chart is for illustrative purposes only and is not intended to be representative of past or future performance. The Jones family saves $340 monthly for 18 years. The Smith family saves $1,219 monthly for 8 years. Assumes a hypothetical 8% annual return compounded monthly.

16. Let the whole family contribute- using a single account The Jones parents contribute $226 every month The Jones grandfather makes an initial contribution of $15,000 $171,508 $63,816 $107,692 Account value after 18 years Total contribution Earnings This chart is for illustrative purposes only and is not intended to be representative of past or future performance. The Jones grandfather makes a lump-sum contribution of $15,000 today. The Jones parents contribute $226 each month. Assumes a hypothetical 8% annual return compounded monthly.

17. The tax-smart way grandparents save for a loved one A 529 account can help decrease your taxable estate while you maintain control over assets Grandparents$750,000 $150,000 $150,000 $150,000 $150,000 $150,000 Married couples filing jointly may contribute up to $150,000 per beneficiary. Individuals may contribute up to $75,000. Contributions are generally treated as gifts to the beneficiary for federal gift tax purposes and are subject to annual federal gift tax exclusion amount ($15,000 for 2018). Contributor may elect to treat contribution in excess of that amount (up to $75,000 for 2018) as pro-rated over 5 years. Election is made by filing a federal gift tax return. While contributions are generally excludable from contributor’s gross estate, if electing contributor dies during 5-year period, amounts allocable to years after death are includible in contributor’s gross estate. Consult your tax advisor for more information.

18. Meeting the challenge of how to spend down college savings BEFORE FILING FOR AID WHILE ATTENDING COLLEGE Use UGMA/UTMA for costs not considered “qualified expenses” for a 529 plan

19. Putnam 529 for America

20. How is Putnam’s 529 different? • Sponsored and administered by the State of Nevada since 2010 • Putnam has experience as a program manager of 529 plans since 2000, and our customer service has been recognized with DALBAR awards for 28 consecutive years • Maximum account contribution limit of $500,000* • No minimum initial contribution (currently being waived) • No enrollment fee *As of July 1, 2019.

21. A wide range of investment choices • Age-based portfolios • Goal-based portfolios • Individual fund options from Putnam and other firms • Putnam Absolute Return Funds

22. Age-based portfolios Actively managed and adjust over time; designed to be more conservative as the child approaches college age Stocks Bonds Cash AGE-BASED ASSET ALLOCATION AGE Asset allocations shown are target allocations. Actual allocations may vary. The age-based and goal-based options invest across four broad asset categories: short-term investments, fixed-income investments, U.S. equity investments, and non-U.S. equity investments. Within these categories, investments are spread over a range of asset allocation portfolios that concentrate on different asset classes or reflect different styles. Each age-based option has a different target date, which is based on the year in which the beneficiary of an account was born. The principal value of the funds is not guaranteed at any time, including age-based options closest to the college age.

23. Goal-based portfolios Actively managed and keep the same allocation mix, regardless of the child’s age Allocations shown are target allocations; actual allocations may vary. See the offering statement for details.

24. Individual investment options allow you to build a custom portfolio with a broad range of choices * Consider these risks before investing: You can lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The fund's sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time. The values of money market investments usually rise and fall in response to changes in interest rates. Changes in the financial condition of an issuer or counterparty, changes in specific economic or political conditions that affect a particular type of issuer, and changes in general economic or political conditions can increase the risk of default by an issuer or counterparty, which can affect a security's or instrument's credit quality or value. Certain securities in which the fund may invest, including securities issued by certain U.S. government agencies and U.S. government sponsored enterprises, are not guaranteed by the U.S. government or supported by the full faith and credit of the United States. Mortgage-backed securities are subject to prepayment risk and the risk that they may increase in value less when interest rates decline and decline in value more when interest rates rise.

25. Putnam Absolute Return Funds These funds are designed to help you meet your college savings goals with potentially lower volatility than more traditional mutual fund investments. Your financial advisor can help you choose the fund that suits your goal. • Putnam Fixed Income Absolute Return Fund invests in a combination of fixed-income and cash securities for investors seeking a lower level of risk than traditional bond funds • Putnam Multi-Asset Absolute Return Fund invests in a combination of stocks and fixed-income securities for investors seeking a lower level of risk than traditional equity funds The funds’ strategies are designed to be largely independent of market direction, and the funds are not intended to outperform stocks and bonds during strong market rallies Consider these risks before investing: Our allocation of assets among permitted asset categories may hurt performance. The prices of stocks and bonds in the funds’ portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including both general financial market conditions and factors related to a specific issuer or industry. Our active trading strategy may lose money or not earn a return sufficient to cover associated trading and other costs. Our use of leverage obtained through derivatives increases these risks by increasing investment exposure. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging market securities, including illiquidity and volatility. Our use of derivatives may increase these risks by increasing investment exposure (which may be considered leverage) or, in the case of many over-the-counter instruments, because of the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. The funds may not achieve their goal, and they are not intended to be a complete investment program. The funds’ effort to produce lower-volatility returns may not be successful and may make it more difficult at times for the funds to achieve their targeted return. In addition, under certain market conditions, the funds may accept greater volatility than would typically be the case, in order to seek their targeted return. For the Putnam Multi-Asset Absolute Return Fund, these risks also apply: REITs involve the risks of real estate investing, including declining property values. Commodities involve the risks of changes in market, political, regulatory, and natural conditions. Additional risks are listed in the funds’ prospectus. You can lose money by investing in the funds.

26. Getting started is easy

27. Contribution overview How much can you contribute? • No minimum investment • Contributions can occur until the account value reaches $500,000* • Contribute five years’ worth of gifts in a single year Many ways to contribute • Contributions must always be made in cash • Invest a lump sum • Establish a dollar cost averaging program • Establish a systematic investment program from your bank • Encourage contributions with gift certificates A gift of $75,000 in 2018 would constitute five years’ worth of gifts. Additional gifts made for the same beneficiary in the same five-year period would be subject to federal gift taxes. Election is made by filing a federal gift tax return. If the electing contributor dies during the 5-year period, amounts allocable to year after death are inducible in the contributor’s gross estate. * Contribution limit as of 7/1/19. Subject to periodic review.

28. Withdrawals are easy When you’re ready to withdraw your savings, simply fill out a single form, indicate how the check should be made out, and mail the form to Putnam. The money can then be sent to the account owner, to the beneficiary, or directly to the college or university the student is attending. • Owners may also make telephone withdrawals payable directly to an educational institution for the benefit of the beneficiary of the account. Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply.

29. Stay up-to-date on 529 resources and news Visit our website for college-planning resources and to explore Putnam 529 for America. putnam.com/529 Go to our Wealth Management blog for insight on handling the rising costs of college. putnamwealthmanagement.com

30. Get started todayContact [insert broker name]Call 1-877-PUTNAM529Visit putnam.com/529

31. For informational purposes only. Not an investment recommendation. Putnam 529 for America is sponsored by the State of Nevada, acting through the Trustees of the College Savings Plans of Nevada and the Nevada College Savings Trust Fund. Anyone may invest in the plan and use the proceeds to attend school in any state. Before investing, consider whether your state's plan or that of your beneficiary offers state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that may not be available through Putnam 529 for America. If you withdraw money for something other than qualified higher education expenses, you will owe federal income tax and may face a 10% federal tax penalty on earnings. Consult a tax advisor. You should carefully consider the investment objectives, risks, charges, and expenses of the plan before investing. For an offering statement containing this and other information about Putnam 529 for America, call Putnam's dedicated 529 hotline at 1-877-PUTNAM529. You should read the offering statement carefully before investing. Putnam Retail Management, principal underwriter and distributor. Putnam Investment Management, investment manager Putnam Retail Management, principal underwriter and distributor Putnam Investment Management, investment manager