Download Marketing Overview August 27, 2008

North Carolina’s National College
Savings Program
Your NC 529 Plan
North Carolina’s 529 Plan
• Most families will pay at least a portion of their
children’s (or other family member’s) college expenses.
• That is much easier to do when you plan ahead.
• A 529 college savings plan can get you started on your
share of future expenses.
North Carolina’s 529 Plan
• What is a 529 plan?
– Federal law allows states to develop “qualified tuition
programs” with tax advantages to help families save
for college.
– “529” refers to the section of the Internal Revenue
Code creating these programs.
– Every 529 plan enables participants to qualify for
federal tax benefits. North Carolina taxpayers
contributing to the NC 529 plan get state tax benefits
as well.
North Carolina’s 529 Plan
• The North Carolina General Assembly authorized a 529
Program for the State in 1996.
• In 1998, a single investment option program, the College
Vision Fund was launched.
• In December, 2001, that program was replaced by a new,
multi-investment option 529 plan, North Carolina’s National
College Savings Program (the NC 529 Plan).
North Carolina’s 529 Plan
• North Carolina’s 529 Plan
– Established and maintained by the
North Carolina State Education Assistance Authority
– Administered by College Foundation, Inc. (CFI)
– Open to residents of any state
– Direct enrollment through CFI, which means no fees
or sales charges for enrolling.
• The General Assembly has established the Parental
Savings Trust Fund, of which the Authority is trustee, to
hold all assets of the Program, but assets are not the
property of the State.
North Carolina’s 529 Plan
• Accessible
• Affordable
• Tax-free earnings and state tax deduction on
contributions
• Flexible
• Comprehensive
This presentation provides general information about the Program and shall not constitute an offer to sell any
interests in the Program. An offer of interest in the Program may be made only by the official Program
Description for North Carolina’s National College Savings Program and an official Enrollment Agreement. Before
opening an Account, or contributing funds to an existing Account, you should carefully read and consider the
Program Description, which includes information on investment objectives, risks, charges, expenses and other
important information. Check with your home state about tax or other benefits associated with investing in its
own qualified tuition plan.
North Carolina’s 529 Plan
• Accessible
– Any adult can open an account to help anyone
who plans to go to college, regardless of the
beneficiary’s age or their relationship. For example, a
parent may open for a newborn, a grandparent for a
grandchild or a neighbor for a friend.
– An individual can even open an account for
himself or herself.
North Carolina’s 529 Plan
• Affordable
– Low Annual Fund Fees and Expenses (from less than
0.30% to only 0.90%)"
– Minimum Contribution Amount of $25
– Contribute when you want, how you want
• On-occasion or regularly scheduled
• Lump-sum or Automatic
North Carolina’s 529 Plan
– Lump Sum
• Personal Check
• Electronic Funds Transfer (EFT)
• Transfer or Rollover from
– Another Section 529 account
– Coverdell Education Savings Account
– Qualified savings Bond (Series EE or I issued
after 1989)
North Carolina’s 529 Plan
• Automatic Investment Plans
• Recurring Bank Draft
– Once or twice per month
• Payroll Deduction
– Employer must be set up with NC 529 Plan to
transmit employee contributions
– Employee must have a Payroll Deduction
Authorization Agreement on file with NC 529
Plan
North Carolina’s 529 Plan
• Tax-free
– North Carolinians pay no federal or North Carolina
income taxes on account earnings when distributions
are used to pay for qualified higher education
expenses.
– Out-of-state residents pay no federal income taxes
on account earnings, but should check with a tax
advisor regarding state taxes.
The features of a qualified tuition program are complex and involve significant tax issues. The earnings portion
of withdrawals not used for qualified higher education expenses are subject to federal income tax and a 10%
federal penalty tax, as well as state and local income taxes. The availability of tax benefits may be contingent on
meeting other requirements.
North Carolina’s 529 Plan
• Tax Deduction
– North Carolina taxpayers are eligible for a State
income tax deduction for contributions to the NC 529
Plan of up to $2,500 ($5,000 for married couple, filing
jointly) per year.
• Under current North Carolina law, these deductions will
be subject to Adjusted Gross Income (AGI) limitations
beginning January 1, 2012
• You should consult your financial, tax, or other advisor to
learn more about how this deduction may apply to your
specific circumstances.
North Carolina’s 529 Plan
• Flexible
– Savings may be used for the beneficiary’s college
costs at virtually any college, anywhere.
– May change future contributions any time.
– May reallocate current funds twice in calendar
year 2009 by special ruling of the IRS.
North Carolina’s 529 Plan
• Comprehensive
– Select investment options that meet your objectives,
consider the time remaining until your beneficiary
needs the money for college, and your tolerance for
risk.
– You may choose one or more of the following options.
North Carolina’s 529 Plan
• Aggressive Stock Fund (Managed by NCM Capital
Management Group, Inc.)
– Offers stock portfolio, NCM Capital’s Focused Equity
Discipline
• Dependable Income Fund (Managed by the NC State
Treasurer)
– Offers a portfolio of income securities designed to
produce a solid return with minimal risk of principal
– NC State Treasurer’s Short Term Investment Portfolio
(STIP)
North Carolina’s 529 Plan
• V Funds (Mutual Funds from The Vanguard Group)
– Eight Individual V Fund Investment Options
comprised of underlying Vanguard mutual funds
– Participants may select from one to all eight funds
– Three Age-Based V Fund Investment Options
• Conservative Track
• Moderate Track
• Aggressive Track
• The beneficiary’s age determines placement within
the risk band you select.
North Carolina’s 529 Plan
Individual V Fund Investment Options
(Comprised of underlying funds from The Vanguard Group)
Individual V Funds
V Fund 1
V Fund 2
V Fund 3
Underlying Vanguard Mutual Fund
Vanguard LifeStrategy
Growth Fund
Vanguard LifeStrategy
Moderate Growth Fund
Vanguard LifeStrategy
Conservative Growth Fund
V Fund 4
Vanguard LifeStrategy
Income Fund
V Fund 5†
Vanguard Prime Money
Market Fund
Vanguard Total Stock Market
Index Fund
Vanguard Total International
Stock Index Fund
Vanguard Total Bond Market
Index Fund
V Fund 6
V Fund 7
V Fund 8
Asset Allocation
80% Stock
20% Bond
60% Stock
40% Bond
40% Stock
40% Bond
20% Short-Term Investment
20% Stock
60% Bond
20% Short-Term Investment
100% Money Market Investment
100% Stock
100% Stock
100% Bond
+ The V Fund 5’s investment in the Vanguard Prime Money Market Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the underlying Vanguard Fund seeks to
preserve the value of the investment at $1 per share, it is possible that the V Fund 5 may lose money by investing in
the underlying Vanguard Fund. Investments in the plan are subject to risk and Participants should carefully read the
Program Description for NC’s National College Savings Program effective June 29, 2009 for more information.
North Carolina’s 529 Plan
Age-Based V Fund Investment Options
(Comprised of Underlying Mutual Funds from The Vanguard Group)
Age of
Beneficiary
Newborn-5
6-10
11-15
16-18
19 & older
Aggressive Track
Moderate Track
Conservative Track
V Fund 1
V Fund 1
V Fund 2
(Vanguard LifeStrategy
Growth Fund)
(Vanguard LifeStrategy
Growth Fund)
(Vanguard LifeStrategy
Moderate Growth Fund)
V Fund 1
V Fund 2
V Fund 3
(Vanguard LifeStrategy
Growth Fund)
(Vanguard LifeStrategy
Moderate Growth Fund)
(Vanguard LifeStrategy
Conservative Growth Fund)
V Fund 2
V Fund 3
V Fund 4
(Vanguard LifeStrategy
Moderate Growth Fund)
(Vanguard LifeStrategy
Conservative Growth Fund)
(Vanguard LifeStrategy
Income Fund)
V Fund 3
V Fund 4
V Fund 5
(Vanguard LifeStrategy
Conservative Growth Fund)
(Vanguard LifeStrategy
Income Fund)
(Vanguard LifeStrategy
Income Fund)
V Fund 4
V Fund 5
V Fund 5
(Vanguard LifeStrategy
Income Fund)
(Vanguard LifeStrategy
Income Fund)
(Vanguard LifeStrategy
Prime Money Market Fund)
+
North Carolina’s 529 Plan
Online access at CFNC.org/NC529 for
– Easy Enrollment
– Account Information
– Account Maintenance
– Frequently Asked Questions
– Savings Calculators
• Representatives available at 800-600-3453 to answer
your questions Monday – Thursday 8 a.m. to 8 p.m. and
Friday 8 a.m. – 5 p.m.
Comparison of College Savings Programs
North Carolina’s 529 Plan
(for higher education)
Coverdell Education Savings Account
(formerly Education IRA)
(for secondary or higher education)
Who can contribute
Anyone
Anyone
Annual contributions
$382,032 (for 2009) Reviewed annually
NC tax deduction on contributions
$2,000 per beneficiary/per year
Account owner/control
Participant (Account owner)
Beneficiary may obtain control at
age of majority
Age of Beneficiary
for contributions
Any age
Up to age 18*
Taxes on qualified
withdrawals
No federal or North Carolina
income taxes
No federal or North Carolina
income taxes
Timing of withdrawals
Whenever the Beneficiary goes
to college
Beneficiary receives remainder in
account at age 30*
Income restriction
None
Adjusted Gross Income limits apply; phases
out at $110,000 (single filers)
and $220,000 (joint filers)
*Does not apply in case of special needs Beneficiary.
Savings Calculator
• Online savings calculator helps you approximate future
college costs and estimate your possible savings growth
at various rates of return
The Investment Options are not guaranteed by the State of North Carolina, the State Education
Assistance Authority, College Foundation, Inc., or any investment manager. Participation in the
Program involves investment risk, which may include the loss of principal. Accounts are not bank
deposits, are not insured by the FDIC, any governmental unit or private person and may lose value.
Participants assume all responsibility for federal and state tax consequences.
Enrollment Forms and Other Information
• Online
CFNC.org/NC529
• E-mail
[email protected]
• Toll free Number 800-600-3453
This presentation provides general information about the Program and shall not constitute an offer to sell any
interests in the Program. An offer of interest in the Program may be made only by the official Program Description
for North Carolina’s National College Savings Program and an official Enrollment Agreement. You should carefully
read the Program Description, which has complete information on options, fees, expenses, risks, and restrictions,
before making a decision to invest. The features of 529 Qualified Tuition Programs are complex and involve
significant tax issues.