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 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 –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 + 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 Aggressive TrackModerate TrackConservative Track Newborn-5V Fund 1 (Vanguard LifeStrategy Growth Fund) V Fund 1 (Vanguard LifeStrategy Growth Fund) V Fund 2 (Vanguard LifeStrategy Moderate Growth Fund) 6-10V Fund 1 (Vanguard LifeStrategy Growth Fund) V Fund 2 (Vanguard LifeStrategy Moderate Growth Fund) V Fund 3 (Vanguard LifeStrategy Conservative Growth Fund) 11-15V Fund 2 (Vanguard LifeStrategy Moderate Growth Fund) V Fund 3 (Vanguard LifeStrategy Conservative Growth Fund) V Fund 4 (Vanguard LifeStrategy Income Fund) 16-18V Fund 3 (Vanguard LifeStrategy Conservative Growth Fund) V Fund 4 (Vanguard LifeStrategy Income Fund) V Fund 5 (Vanguard LifeStrategy Income Fund) 19 & olderV Fund 4 (Vanguard LifeStrategy Income Fund) V Fund 5 (Vanguard LifeStrategy Income Fund) V Fund 5 + (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 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 contributeAnyone Annual contributions$382,032 (for 2009) Reviewed annually NC tax deduction on contributions $2,000 per beneficiary/per year Account owner/controlParticipant (Account owner)Beneficiary may obtain control at age of majority Age of Beneficiary for contributions Any ageUp to age 18* Taxes on qualified withdrawals No federal or North Carolina income taxes No federal or North Carolina income taxes Timing of withdrawalsWhenever the Beneficiary goes to college Beneficiary receives remainder in account at age 30* Income restrictionNoneAdjusted 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 OnlineCFNC.org/NC529 Toll free Number 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.