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529 College Savings Plan Basics

529 College Savings Plan Basics. Enacted in 1996; named after Section 529 of the Internal Revenue Code. State program with tax advantages to help families prepare for college. Each state implements its own 529 program. Edvest is the state of Wisconsin’s direct-sold 529 plan.

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529 College Savings Plan Basics

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  1. 529 College Savings Plan Basics • Enacted in 1996; named after Section 529 of the Internal Revenue Code. State program with tax advantages to help families prepare for college. • Each state implements its own 529 program. Edvest is the state of Wisconsin’s direct-sold 529 plan. • Edvest is administered by the state of Wisconsin Department of Administration (DOA), program manager TIAA-CREF Tuition Financing, Inc. • Approximately $2.47 billion in assets and 152,068 accounts as of August 30, 2016. 2Source Savingforcollege.com January 5, 2016. The Edvest College Savings Plan received a 5-cap Rating for Wisconsin residents and a 4.5 cap rating for non-residents. A 5-cap rating represents the attractiveness of a 529 plan relative to all other 529 plans , by assigning an overall rating to each 529 program ranging from 1 cap (least attractive) to 5 cap (most attractive). 5-cap ratings represent an assessment based on many considerations such as flexibility, liquidity and availability, ownership rights, state benefits, investment approach and safety, program resources and financial aid impact. It is not strictly a measure of historical returns, and it is not a predictor of future investment performance, level of investment risk, or financial solvency of the program funds. These ratings are not the result of a fixed formula and a significant portion of the analysis is subjective.

  2. 529 Plan Basics – How it Works • Qualified Higher Education Expenses • Any “eligible” institution * • Substantial Max. Acct. Balances *To an eligible family member. Please see the Disclosure Booklet for additional information.

  3. 529 Plan Basics – One Size Fits Many The account can be used for a variety of qualified expenses, including: • Tuition • Mandatory Fees • Certain Room and Board Costs* • Computers/tablets, and related technology costs such as Internet access fees, printers, software** • Books • Mandatory Equipment and Supplies Can be used at eligible higher education institutions nationwide (and many abroad*), including: • College • University • Technical College • Professional School • Any type of degree or certificate program • Graduate degrees included *For a list of applicable international schools, and qualified expenses, visit Edvest.com. Student must be enrolled half the time of a full time course. See the Disclosure Booklet for more information. **The student must be the primary user of the equipment.

  4. Edvest Tax Advantages • Tax-free Growth Any earnings can grow federal and state tax-deferred while in the account and are tax-free on qualified withdrawals. • State Tax Deduction. Contributions up to $3,100 per beneficiary for the 2016 tax year are deductible for Wisconsin state tax purposes. Amount is subject an annual inflation adjustment. • Federal Gift Tax Exclusion. Up to $14k/$28K (single/married status) annual exclusion. Or accelerate 5 years of gifting in one year with up to $70k/$140k (single/married status) without incurring a gift tax. Limitations may apply. Please the Plan Disclosure Booklet. Consult your tax advisor.

  5. The Way You Pay Matters Source: Savingforcollege.comThis chart hypothetically assumes four years of college (current annual cost of $20,000) for a child born today. To meet that expense 18 years from now, you would need to save $448 per month (from birth) in a 529 plan — totaling $207,456; $113,000 in contributions and $94,456 in earnings, assuming a conservative 5 percent college cost inflation rate and a 6 percent annual investment return. If the same funds were borrowed to pay for college rather than saving and investing your child would graduate owing about $276,383 in loans. This translates into a monthly payment of approximately $2,303 over 10 years, assuming a 6 percent loan interest rate. In other words, college would end up costing an additional $163,383, or more than double in out-of-pocket costs, than if you had saved and invested in advance.

  6. Potential Impact on Financial Aid • 529 plan assets are considered assets of the Account Owner on the Free Application for Federal Student Aid (FAFSA). • If the Account Owner is the parent/guardian, 529 plan assets are factored into the EFC (Expected Family Contribution) at a rate of 5.6% - just like any other parental asset – vs. 20% for student assets.* • If the Account Owner is a grandparent or non-parent, 529 plan assets will not be factored into the EFC, but 529 plan distributions will be considered income to the student and may affect future financial aid consideration.* • Wisconsin families can receive free, in-person help at College Goal Wisconsin events throughout the state during November and January. Visit www.Collegegoalwi.org The treatment of investments in a 529 savings plan varies by school. Assets are typically treated as the account owner’s and not the student’s. Any investments, including those in 529 accounts, may affect the student’s eligibility to receive need-based financial aid. You should check with the schools you are considering regarding this issue. Please consult a financial aid advisor and tax professional for more information. For more information about Financial Aid, please visit www.fafsa.gov.

  7. Edvest Resources • Visit Edvest.com • Full program details • Savings calculators and tools • Use the email form to order free materials - kits, brochures, special requests such as newsletter content, social media posts, etc. • Edvest representatives available to attend benefit & wellness fairs, PTA meetings, community events & festivals. • We actively seek educational and cultural sponsorship opportunities.

  8. Important Disclosures Consider the investment objectives, risks, charges and expenses before investing in the Edvest College Savings Plan. Visit www.edvest.com for a Plan Disclosure Booklet containing this and other information. Read it carefully. Investments in the Plan are neither insured nor guaranteed and there is the risk of investment loss. Before investing in a 529 plan, consider whether the state in which you or your Beneficiary resides has a 529 plan that offers favorable state tax benefits that are available if you invest in that state’s 529 plan. Taxpayers should seek advice, based on their own particular circumstances, from an independent tax advisor. Non-qualified withdrawals may be subject to federal and state taxes and the additional 10% federal tax. The Edvest College Savings Plan is offered by the State of Wisconsin. TIAA-CREF Tuition Financing, Inc., program manager. TIAA-CREF Individual & Institutional Services, LLC, member FINRA, distributor and underwriter for Edvest. Neither TIAA-CREF Tuition Financing, Inc., nor its affiliates, are responsible for the content found on any external website links contained herein. C30835

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