The Importance of College: Health, Job Opportunities, and Financial Benefits

1. Presenter’s Name Presenter’s Title <Date>

2. Why is college so important? • College graduates versus noncollege graduates • 1 Education Pays 2016: The Benefits of Higher Education for Individuals and Society, CollegeBoard Advocacy & Policy Center. • 2 “The effect of college education on mortality”, Brookings Institute, October, 2016. 1 Are generally healthier¹ 2 Live longer² 3 Have more job opportunities 4 Make more money—67% more¹ 5 Experience less unemployment¹

3. Who cares about being able to afford college? • 1 “How America Saves for College,” Sallie Mae, 2018. 2 “College Hopes & Worries,” The Princeton Review, 2018. The middle class is worried 44% of families said they were overwhelmed when thinking about saving for college¹ 69% of parents said it is extremely necessary for their child to receive2

4. Test your knowledge of 529 plans Learn some of the most common 529 myths and mistakes Score yourself as we go along! READY?

5. A 529 savings plan can only be used to save for an in-state school 1 • 529 savings plan money can be used in any state, for any qualified expense • College tuition and fees • Room and board • Books • Computers and other supplies • Required equipment • Additional expenses of a special-needs beneficiary • K through 12 tuition expenses of up to $10,000

6. A 529 savings plan can only be used to save for an in-state school 1 • Watch out for expenses that are not qualified • Insurance, sports, or club fees • Transportation costs • Repayment of student loans • K through 12 nontuition expenses

7. You’re better off sticking with your local state plan 2 • Evaluate your state plan first • Tax incentives are just one factor Savings may be counteracted by poor performance or less attractive investment options • Other important facts to consider: • Plan performance over the long run • Investment options & Past performance is no guarantee of future results.

8. 529 plans can’t be used for adults 3 • While 529s can benefit youngsters, they can also be used by adults for postsecondary or graduate school • No age limits to a 529 Retirees can take classes with their grandkids! • Unused money is easy to transferto another beneficiary within the same family

9. 529 plans are just for traditional four-year colleges 4 True or False • Many junior and community colleges, vocational training programs, andpostgraduate programs qualify • Use 529s at any educational institution that meets specific federal accreditation standards Most two-year and four-year colleges and universities Can be used for undergraduate, graduate, and doctorate degrees and at vocational schools • Tuition for grades K through 12

10. 529 accounts are difficult to open and maintain 5 • Advisor-sold plans offer the assistance of a financial professional • Help with allocations, setting goals, and investment selection • Investment options that are tailored to specific time horizons offer easy portfolio choices

11. High income earners can’t contribute to a 529 6 • There are NOincome limits on 529s • Everyone is eligible, no matter their income, deductions, tax brackets, or tax credits • Useful for estate planning

12. Consider maximum funding • Maximum contribution to a 529 college savings plan varies by plan • 1 Gift must be made by a married couple, filing jointly. The donors must elect that the gift be treated as having occurred over a 5-year period in order for it to qualify for the federal gift tax exclusion. If additional gifts are made to the same beneficiary during this 5-year period, a federal gift tax may apply. If the donor dies within this 5-year period, a pro rata share will be included in the donor’s estate for federal estate tax purposes. State gift and estate tax laws may vary. 2 The amount is indexed annually for inflation. • Consider gifting the first $150,000 with the five-year accelerated gift¹ • Individuals can maximize the current $11,400,000 lifetime gift tax exemption² • This maximizes the educational legacy for the beneficiary while still retaining the wait and see control

13. Jennifer and Tim Parents Adam and Melanie Parents Jordan $150K Lisa $150K Drew $150K Mike $150K Tracy $150K $150K $150K $150K $150K $150K The power of gifting • Hypothetical example for illustrative purposes only. Not indicative of any portfolio. The donor must elect that the gift be treated as having occurred over a five-year period in order for it to qualify for the federal gift tax exclusion. If additional gifts are made to the same beneficiary during this five-year period, a federal gift tax may apply. If the donor dies within this five-year period, a pro rata share will be included in the donor’s estate for federal estate tax purposes. State gift and estate tax laws may vary. Susan and Howard Grandparents Grandparents removed $750,000 from estate and, as the account holder,maintain control Parents removed $450,000 and $300,000 from estates, respectively Each child has an account starting with$300,000!

14. Accelerated gifting example • Hypothetical example is for illustrative purposes only. Not indicative of any portfolio. $66,000 Year 1 Year 2 Year 3 Year 4 Year 5 $13,200 $13,200 $13,200 $13,200 $13,200 $1,800 $1,800 $1,800 $1,800 $15,000 $15,000 $15,000 $15,000

15. Use 529 plans in trusts • Source: irs.gov. State tax laws and treatment may vary. Earnings on nonqualified distributions will be subject to income tax and a 10% federal penalty tax. Please consult your tax advisor for more information. Do you have a funded trust that provides educational support to your beneficiaries? • Irrevocable trusts are subject to a very compressed income-tax bracket • In 2019, trust income in excess of $12,750 is subject to a 37% tax • Any earnings that accumulate in a 529 plan will grow tax deferred and, if used for educational purposes, are tax free

16. The wait-and-see trust • Five-year front-loading • 1 The donor must elect that the gift be treated as having occurred over a five-year period in order for it to qualify for the federal gift tax exclusion. If additional gifts are made to the same beneficiary during this five-year period, a federal gift tax may apply. If the donor dies within this five-year period, a pro rata share will be included in the donor’s estate for federal estate tax purposes. State gift and estate tax laws may vary. • Considered a completed, present interest gift • Five years worth of gifting in one year Allows up to $75,000 if single, $150,000 if married, filing jointly, to be gifted¹ • Gift is immediately removed from donor’s estate but can be accessed by the account holder if needed

17. You’ll lose your savings if your child doesn’t go to college 7 • Assets can be transferred―to yourself or to any family member of the beneficiary • There is generally no tax or penalty on withdrawals from principal • Distributions are taken pro rata • Taxes (at ordinary income-tax rates) and a 10% penalty are applied to any earnings withdrawn that aren’t used for qualified educational expenses

18. Anyone can contribute to a 529 8 • Anyone can contribute • Parents • Grandparents • Aunts • Uncles • Cousins • Neighbors • Strangers (if they wanted to)

19. Savings in a 529 plan dramatically reduce financial aid eligibility 9 • Assets are considered the account holder’s; therefore, they may have much less of an impact on financial aid • Source: Free Application for Federal Student Aid (FAFSA), 2019.

20. Savings in a 529 plan dramatically reduce financial aid eligibility 9 • What’s a GREATway to save for college? • Other college savings vehicles • Coverdell ESAs • Life insurance • Annuities • IRAs • Roth IRAs A 529 plan!

21. Other college savings vehicles 529 versus life insurance • 1 Withdrawals are tax free if used for qualified higher education purposes. Other withdrawals are subject to income tax and penalty on any earnings withdrawn. • 2 Loans are subject to the provisions of the life insurance policy. A policy lapse, or the nonpayment of all or part of a policy loan, can result in adverse tax consequences. • 3 Nonqualified distributions from a 529 plan would be included as income for purposes of completing the FAFSA; certain exceptions may apply. • 4 To the extent withdrawals are taxable, they will be included on the FAFSA. • 5 Limits on contributions may apply. May incur gift taxes. Excess contributions can turn a life insurance policy into a modified endowment contract which, amongst other changes, loses access to tax preferential policy loans.

22. Other college savings vehicles 529 versus annuity • 1 Withdrawals are tax free if used for qualified higher education purposes. Other withdrawals are subject to income tax and penalty on any earnings withdrawn. • 2 Nonqualified distributions from a 529 plan would be included as income for purposes of completing the FAFSA; certain exceptions may apply. • 3 Limits on contributions may apply. May incur gift taxes.

23. Other college savings vehicles 529 versus Roth IRA • 1 Withdrawals are tax free if used for qualified higher education purposes. • 2 Roth IRA distributions are tax free if the IRA owner has held a Roth IRA for at least five years and has attained age 59½. If these conditions are not met, withdrawals may be subject to both a 10% penalty and/or ordinary income tax. Contributions can be removed penalty free. Earnings may be removed penalty free, if owner is over 59½ years old and account has been held for five years. Consult a tax professional for more information. • 3 Nonqualified distributions from a 529 plan would be included as income for purposes of completing the FAFSA; certain exceptions may apply. • 4 The maximum contribution to a Roth IRA in 2019 is $6,000, +$1,000 catch-up if over age 50. Contributions in excess of this amount are subject to penalty.

24. If your child wins a full scholarship, you’ll pay a penalty on withdrawals from 529 savings plan assets 10 • Savings can be transferred to another family member, or yourself, without penalty • There is generally no tax or penalty on withdrawals from principal • You can withdraw amounts equal to the amount of the scholarship without penalty (taxes may still apply to earnings)

25. If your child wins a full scholarship, you’ll pay a penalty on withdrawals from 529 savings plan assets 10 • How likely is a full scholarship for a child? If a full scholarship does happen, 529 college savings plans assets can be: • Used for educational expenses not covered by the scholarship • Used for a later advanced degree • Used by another individual (change the beneficiary to another member of the family) • Saved for higher education later in life

26. Get extra credit • How did you do? CONGRATULATIONS! • Need some tutoring?John Hancock Freedom 529 can help! jhinvestments.com/529

27. Get started! Think about yourconcerns for your children An education is one of their most pressing emotional and financial needs Don’t wait to have the conversation with your advisor

28. Questions? Contact John Hancock Investment Management Visit us at jhinvestments.comor call us at 866-222-7498

29. Investor considerations This material does not constitute tax, legal or accounting advice and neither John Hancock nor any of its agents, employees or registered representatives are in the business of offering such advice. It was not intended or written for use and cannot be used by any taxpayer for the purpose of avoiding any IRS penalty. It was written to support the marketing of the transactions or topics it addresses. Anyone interested in these transactions or topics should seek advice based on his or her particular circumstances from independent professional advisors. State tax laws and treatment will vary. Earnings on nonqualified distributions will be subject to income tax and a 10% federal penalty tax. 529 plans could reduce a beneficiary’s ability to qualify for grants and student loans. Some states offer benefits for residents who invest in their state’s plan, including deductions for contributions and/or exemptions from state tax for qualified withdrawals.