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Sunday, June 01, 2014 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Jodi Golden P Phillip Waddles E
1 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Why you should be saving for college now Rising costs Over the past decade, the cost of a college education (including tuition and fees, and after inflation) has risen an average of:* 6% for public 4-year colleges 4% for private 4-year colleges Increased loan debt Students had an average education loan debt of $27,000 in 2010 Americans owe close to $1 Trillion in student loan debt. * Source: The College Board, Trends in College Pricing, 2012.
2 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Saving now can help ease post-college debt * A plan of regular investment cannot assure a profit or protect against a loss in a declining market. Scenario 1: Terrys parents start investing $100/month into a 529 plan account right after Terrys birth In 18 years (assuming 5% annual rate of return), they could potentially save over $35,000* Scenario 2: Terry has to borrow $35,000 to attend college Based on private student loan rate of 7.0%, could be faced with a monthly payment of $406 for 10 years (or $48,720)
3 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan The CollegeChoice 529 Direct Savings Plan: An overview
4 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Help is here: The CollegeChoice 529 Direct Savings Plan Sponsored by: State of Indiana Indiana Education Savings Authority Chaired by Richard Mourdock, State Treasurer Program management by: Upromise Investments, Inc. Payroll deduction offered through: State of Indiana
5 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan What are the tax benefits? Tax-deferred growth Earnings grow tax deferred until withdrawn Tax-free qualified withdrawals for higher education expenses* Use the money for tuition, fees, certain room and board costs, books, and required supplies Any qualifying post-secondary institution in the U.S., including 2- and 4-year colleges, vocational/technical schools, and graduate schools Special tax credit for Indiana taxpayers Contributions to a CollegeChoice 529 account are eligible for a state income tax credit of 20%, up to $1,000 credit per year** Contribution deadlines: Electronic Bank Transfers (EBT): Submit before 11:59 p.m. Eastern Time on 12/31. Automatic Investment Plans (AIP): Must have debit date of no later than 12/31. By mail: Must be RECEIVED by the plan before 12/31 and in good order. * Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax. Non-qualified withdrawals may also be subject to state and local income tax. The availability of tax or other benefits may be contingent on meeting other requirements. ** This credit may be subject to recapture from the account owner (not the contributor) in certain circumstances, such as a rollover to another states 529 plan or a non-qualified withdrawal.
6 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Why are these tax benefits important? Assumptions: $2,500 initial investment with subsequent monthly investments of $100 for a period of 18 years; annual rate of return on investment of 5% and no funds withdrawn during the time period specified; and taxpayer is in the 30% federal income tax bracket for all options at the time of contributions and distribution. This hypothetical is for illustrative purposes only. It does not reflect an actual investment in any particular 529 plan or any taxes payable upon distribution. Actual investment returns may be higher or lower than those shown.
7 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan How affordable is the Plan? Low fees 0.27% to 0.91% of invested assets, depending on the investments chosen $20 annual account fee (waived when the account owner or beneficiary is an Indiana resident, or if the account balance is greater than $25,000) Low contribution amounts $25 (per paycheck) for contributions made through payroll deduction $25 minimum for ongoing contributions (electronic fund transfer, Automatic Investment Plan,* or check) High maximum contribution limit $298,770 per beneficiary *A plan of regular investment cannot assure a profit or protect against a loss in a declining market.
8 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan What are the investment options? Age-based option - professionally managed by Vanguard One of the worlds largest investment firms Over $1 trillion in assets under management Commitment to high-value, low-cost investing Individual portfolios Wide range of investments from respected firms
9 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Age-based option Portfolios with higher allocations to bonds and short-term investments tend to be less volatile than those with higher stock allocations. Less-volatile portfolios generally may not decline in value as much when markets decline, but they also may not appreciate in value as much when markets go up. The Age Based Portfolios' 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 Fund seeks to preserve the value of your investment at $1.00 per share, it is possible that the Portfolios may lose money by investing in the Fund. Automatically becomes more conservative as the beneficiary approaches college age
10 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Individual portfolios: Select your own * As a result of investing in undervalued sectors of the market as well as in non-investment grade securities, the Portfolio may at times experience periods of high volatility, especially when the market itself is experiencing dramatic volatility. ** The Savings Portfolio invests all of its assets in the Sallie Mae High-Yield Savings Account, (HYSA). The HYSA is held in an omnibus savings account insured by the Federal Deposit Insurance Corporation (FDIC), which is held in trust by the Indiana Education Savings Authority (Authority) at Sallie Mae Bank. Contributions to and earnings on the investments in the Savings Portfolio are insured by the FDIC on a pass-through basis to each account owner up to the maximum amount set by federal law currently $250,000 through December 31, 2013, and $100,000 thereafter. The amount of FDIC insurance provided to an account owner is based on the total of (a) the value of an account owners investment in the Savings Portfolio; and (b) the value of all other accounts held by the account owner at Sallie Mae Bank, as determined by Sallie Mae Bank and FDIC regulations. The Money Market Portfolios 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 Fund seeks to preserve the value of your investment at $1.00 per share, it is possible that the Portfolios may lose money by investing in the Fund.
11 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Who can be an account owner? Any U.S. citizen or resident alien * Parents, grandparents, relatives, and even friends No income limitations Multiple account owners can open accounts for the same beneficiary An account owner can open accounts for multiple beneficiaries Account owner retains control of how and when the money is used * Must be 18 or older, have a Social Security number or Tax Identification number, and a U.S. address that is not a P.O. Box.
12 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Who can be a beneficiary? Any U.S. citizen or resident alien * You, your children, spouse, relatives, and even friends No age or income limitations Account owner can change the beneficiary to a qualifying family member of the current beneficiary without taxes or penalties * Must be 18 or older, have a Social Security number or Tax Identification number, and a U.S. address that is not a P.O. Box.
13 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan What if the beneficiary doesnt go to college? Leave the money in the account until a later date Change the beneficiary to a member of the family Make a non-qualified withdrawal, subject to federal and state income tax on earnings, plus a 10% federal penalty tax on earnings Several categories of withdrawals are not subject to the 10% penalty tax, namely a beneficiarys: Receipt of a scholarship Attendance at a military academy Disability Death
14 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan How easy is it to enroll? Only takes 10 minutes to enroll online You will need: Account owner information Social Security number, date of birth, permanent address, address Beneficiary information Social Security number, date of birth, state of residence Initial investment $25 with payroll deduction* $25 with an Automatic Investment Plan* $25 with a check or electronic fund transfer *A plan of regular investment cannot assure a profit or protect against a loss in a declining market.
15 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan About payroll deduction
16 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan How does payroll deduction work? You can sign up for payroll deduction during or after plan enrollment by: 1.Enrolling in the Plan either online or with a paper application form 2.Submitting a Payroll Deduction Authorization Form to your Human Resource, Benefits, or Payroll department Contribute as little as $25 per account, per pay period Contributions to your 529 account are made from each paycheck after taxes You can start, stop, or change your payroll deductions at any time Notify your employer of any changes to your payroll deduction instructions
17 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Help is here: The CollegeChoice CD 529 Savings Plan Sponsored by: State of Indiana Indiana Education Savings Authority Chaired by Richard Mourdock, State Treasurer Program management by: College Savings Bank Payroll deduction offered through: State of Indiana
18 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan FDIC-Insured CDs: Protection Against Risk *The Federal Deposit Insurance Company generally insures, with respect to each FDIC insured institution, deposit accounts that are held in the same right and capacity up to the maximum amount set by federal law, currently $250,000. An account owners interest in the insurable balance is insured by the FDIC on a pass-through basis, together with any other deposit accounts the account owner holds at College Savings Bank, up to the maximum amount. FDIC deposit insurance is backed by the full faith and credit of the U.S. Government.
19 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan What are the CD options? CollegeChoice CollegeSure CD Is a variable rate CD, with maturities from 1 to 22 years, indexed to college costs and designed to move with college inflation. CollegeChoice InvestorSure CD Is a 5-year, variable rate CD indexed to the Standard & Poors 500® Composite Index. The InvestorSure CD earns from 70% to 100% of the average increase in the S&P 500 at maturity. CollegeChoice Fixed Rate CDs Are offered with both 1- and 3-year maturities and earn interest the next business day after deposits are received. Interest is calculated and credited annually. All CollegeChoice CDs Guarantee principal when held to maturity and each account is FDIC-insured to the maximum allowable limit.
20 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Product Summary (As of 3/29/13) 1.CollegeSure CD rates adjust annually based upon college inflation, as measured by the IC500 Index and set by the College Board. 2.InvestorSure CD yield is determined based on S&P 500 Index performance over 5-years, and is not available until maturity. 3.Accumulator Account earns a variable interest rate equal to the Federal Funds Target Rate, set by the Federal Reserve Open Market Committee.
21 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Additional savings through Ugift ® – Give College Savings and Upromise ®
22 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Ugift ® – Give College Savings Easy-to-use online gifting program Lets you invite family and friends celebrate by giving the gift of college savings in place of a traditional present Great for Birthdays Religious celebrations Graduations Holidays Registries Any special occasion!
23 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan How does Ugift work? An account owner sends personalized invitations to family and friends asking them to celebrate milestones with the gift of college savings Invitations can be sent either by or printed out Invitees send in a check with a specially coded coupon Gift contributions are invested in the beneficiarys CollegeChoice 529 account Its that easy!
24 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Earn money for college with Upromise ® 1. Join Upromise for free at 2. Link your Upromise account to your CollegeChoice 529 account on the secure Upromise website 3. Get cash back for college when you eat out at a restaurant, shop online, buy groceries, fill the gas tank, book travel, and more 4. Upromise earnings are automatically transferred to your linked CollegeChoice 529 account on a periodic basis (subject to a $25 minimum) Hundreds of leading companies can help you save for college! * Upromise is an optional service offered by Upromise, Inc., is separate from CollegeChoice 529, and is not affiliated with the State of Indiana. Specific terms and conditions apply. Participating companies, contribution levels and conditions subject to change without notice.
25 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan From everyday expenses to big purchases HOW UPROMISE WORKS Using Upromise is a smart way to earn cash back for college on your everyday purchases. From shopping and booking travel online to filling up your gas tank, to dining with a Upromise partner, there are opportunities to earn cash back every day. * To earn 5% or more cash back with Upromise.com, you must make an eligible purchase with a participating Upromise online shopping partner. Exclusions apply. For example, online shopping excludes Travel, Subscriptions, Services, and other categories. See details at shop.upromise.com Never miss an opportunity to earn cash back for college: UPROMISE ONLINE SHOPPING You can earn 5% or more cash back for college on eligible online purchases through Upromises 800+ partners* UPROMISE DINING Earn up to 8% cash back when dining at thousands of participating restaurants UPROMISE TRAVEL Earn up to 4% cash back when you book airfare, hotels, and rental cars through Upromise UPROMISE CREDIT CARD Earn cash back on all purchases all the time, PLUS an additional 5% cash back on eligible online purchases at Upromise
26 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Max U Mobile App Third and final installment in the Small Steps, Big Dreams suite of apps One-stop tool that helps students understand the steps involved in getting into college and how to best prepare for them Targets age range Interactive tools include: College Cost Cruncher, Brag Bank, and FAFSA Checker Free download for both Apple and Android products
27 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan How do I learn more? Visit Learn more about the Plan Enroll online Request an enrollment kit Call to speak with a CollegeChoice 529 Client Service Representative Monday through Friday, 8 a.m. to 8 p.m. ET Learn More about CollegeChoice CD at: Visit Contact a Service Representative at: Monday through Friday, 9 a.m. to 6 p.m. ET Big plans start with a simple Choice: CollegeChoice 529.
28 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Questions and answers
29 CONFIDENTIAL © 2013 CollegeChoice 529 Direct Savings Plan Important legal information For more information about the CollegeChoice 529 Direct Savings Plan (CollegeChoice 529), call or visit to obtain a Disclosure Statement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. Upromise Investments, Inc. (UII) is Distributor of CollegeChoice 529. If you are not an Indiana taxpayer, consider before investing whether your or the beneficiarys home state offers any state tax or other benefits that are only available for investments in such states qualified tuition program. CollegeChoice 529 is administered by the Indiana Education Savings Authority (Authority). UII, the Program Manager, and its affiliates, have overall responsibility for the day-to-day operations, including investment advisory, recordkeeping and administrative services, and marketing. CollegeChoice 529s Portfolios invest in: (i) mutual funds; or (ii) an FDIC-insured omnibus savings account held in trust by the Authority at Sallie Mae Bank. Except for the Savings Portfolio, investments in CollegeChoice 529 are not insured by the FDIC. Units of the Portfolios are municipal securities and the value of units will vary with market conditions. Investment returns will vary depending upon the performance of the Portfolios you choose. Except to the extent of FDIC insurance available for the Savings Portfolio, depending on market conditions, you could lose all or a portion of your money by investing in CollegeChoice 529. Account Owners assume all investment risks as well as responsibility for any federal and state tax consequences. Upromise, the Upromise logo and Ugift are registered service marks of Upromise, Inc. All other marks are the exclusive property of their respective owners. The Upromise Service is an optional service offered by Upromise, Inc. and is separate from CollegeChoice 529. Specific terms and conditions apply. Participating companies, contribution levels, terms and conditions are subject to change. As of December 2, 2013, Upromise Investments, Inc.; Upromise Investment Advisors, LLC; and Upromise Investment Recordkeeping Services, LLC are no longer affiliated with SLM Corp. or its affiliates. Not FDIC-Insured (except for the Savings Portfolio). No Bank, State or Federal Guarantee. May Lose Value.
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