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2. The Challenge

3. College costs are rising
Four years of tuition and fees
$107,115
2034
$368,870
2016
Public college
(in state)
$40,861
Private college
$140,711
College costs are going up. Using a conservative 5.5% inflation rate, if current trends continue, in 18 years tuition could cost over $107,000 at a public college. Whereas, tuition at a private college would be projected to total over $368,000.
Source: The College Board, 2015

4. College debt is also rising
Total education debt — including federal and private education loans — is expected to tally nearly $68 billion this year for graduates with a bachelor’s degree and their parents, a more than 10-fold increase since 1994
Almost 71% of bachelor’s degree recipients will graduate with a student loan
The average class of 2015 graduate with student-loan debt will have to pay back a little more than $35,000
Few students can afford to pay for college without some form of education financing.
Undergraduate students receive 46% of their funding in the form of grants and 49% in the form of loans, including alternative nonfederal loans.
About 7 in 10 (70%) of 4-year undergraduate students graduate with some debt, and the average student loan debt among graduating seniors is a little over $35,000.
Source: Edvisors, May 2015.

5. College still offers life-long benefits
Linked to long-term social and physical wellness
Higher income over lifetime, depending upon major selected
Decreased likelihood of unemployment
Is college worth it?
The numbers tell the story: The pay gap between college graduates and everyone else is huge.
According to the DOL, median full-time earnings for workers with only a high school degree are under $35,000, while those for individuals with a bachelor’s degree are over $62,000.
Source: U.S. Department of Labor, 2015.

6. Help meet the challenge with a 529 plan
Like most major financial goals, financing a college education requires planning. A 529 plan offers many benefits for families who want to save for college.

7. What is a 529 plan?
A tax-advantaged way for families to save for college
Available to investors nationwide
Proceeds can be used for any accredited college
Originally, 529 plans were designed to help state residents pay for in-state public universities.
In the 1990s, they became available to investors nationwide when Congress built the plans into the Internal Revenue Code (Section 529).
Proceeds from a 529 account can be used at any accredited college to pay for tuition, fees, room and board, books, and other qualified expenses.
In fact, with the passage of the 2015 federal spending and tax package, laptops, computers, and related technology are now considered qualified education expenses.
The earnings in a 529 account are not taxed, so your savings can accumulate faster than they would in a taxable account.

8. Benefits of a 529 plan
Anyone — regardless of income — can contribute to the account
You can change beneficiaries at any time
Control of the account will not shift to the child as with traditional savings accounts
Favorable financial aid treatment
A key benefit of a 529 plan is that anyone can contribute on behalf of the beneficiary — parents, grandparents, aunts, uncles, and friends. Contributions can be as high as $370,000 over the life of the account.
If you have a change in plans — for example, your child receives a scholarship or decides not to attend college — you can switch the account to another beneficiary. You can change the beneficiary as many times as you like, providing it is a family member, as defined by the IRS. You can even name yourself as beneficiary.
Another benefit is control. As account owner, you retain control over withdrawals for the life of the account. This benefit is not offered by non-529 education savings accounts, such as UGMAs or UTMAs, which transfer control to the child when the child reaches legal age.
A parent-owned 529 account reported on the federal financial aid application is assessed at a maximum 5.64% rate in determining the student's Expected Family Contribution. Child-owned assets, on the other hand, reported on the same form are assessed at a maximum 20% rate.

9. Benefits of a 529 plan
Rollovers allowed once every 12 months or upon change of a beneficiary
Investment changes allowed twice per calendar year
You have other options if the child does not attend college
Another option, if your child doesn’t go to college, is to leave the money invested in the plan for later use. However, if you use your savings for non-qualified expenses, the earnings portion will be taxed at the recipient’s tax rate and will be subject to a 10% additional tax.

10. The tax-smart way to save
You pay no federal income taxes
On your earnings while the account is invested
When you withdraw money to pay for college expenses
Contributions are made with after-tax dollars
Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply. Withdrawals for qualified higher education expenses subject to tax if the American Opportunity Credit Scholarship or Lifetime Learning Credit is claimed for same expenses. If withdrawing funds for qualified higher education expenses from both a 529 account and a Coverdell Education Savings Account, a portion of the earnings distribution may be subject to tax and penalty on amounts that exceed qualified higher education expenses. Read the offering statement for details.
Tax advantages are another reason the 529 plan is the most popular way to save for college.
With a 529 plan, you pay no federal income taxes on your earnings while your account is invested.
Also, you pay no federal income taxes on withdrawals to pay for qualified expenses such as college tuition, room, and board.
Withdrawals of earnings not used to pay for qualified higher education expenses are subject to taxes and penalty. While qualified withdrawals are federally tax free, state taxes may apply. Your tax advisor or financial representative can help you determine what’s best for you in terms of tax consequences.

11. The tax-smart way to save
Gift tax benefits: Make five years’ worth of gifts without triggering the federal gift tax
Maximum for individuals: $70,000 for 2016
Maximum for married couples: $140,000
A 529 account offers a special gift tax exclusion that allows you to make five years’worth of gifts in a single year to a single beneficiary without triggering the federal gift tax.
[Contributions are generally treated as gifts to the beneficiary for federal gift tax purposes and are subject to the annual federal gift tax exclusion amount ($14,000 for 2016). Contributor may elect to treat contributions in excess of that amount (up to $70,000 for 2016) as prorated over 5 years. Election is made by filing a federal gift tax return. While contributions are generally excludable from contributor’s gross estate, if electing contributor dies during the 5-year period, amounts allocable to years after death are includible in contributor’s gross estate. Consult your tax advisor.]

12. The tax-smart way to save
A 529 account can help decrease your taxable estate while you maintain control over assets Ω
Grandparents $700,000 Ω
$140,000 Ω
$140,000 Ω
$140,000 Ω
$140,000 Ω
$140,000
A 529 account can also help with estate planning. In certain cases, contributions to a 529 account can be removed from your estate for tax purposes — yet you will retain control over the assets. This benefit is unique to 529 plans.
In this illustration, these grandparents were able to remove $700,000 from their estate in one year, while contributing to the 529 accounts for five grandchildren. In addition, they retain control over the assets for the life of the accounts.
Married couples filing jointly may contribute up to $140,000 per beneficiary. Individuals may contribute up to $70,000. Contributions are generally treated as gifts to the beneficiary for federal gift tax purposes and are subject to annual federal gift tax exclusion amount ($14,000 for 2016). Contributor may elect to treat contribution in excess of that amount (up to $70,000 for 2016) as pro-rated over 5 years. Election is made by filing a federal gift tax return. While contributions are generally excludable from contributor’s gross estate, if electing contributor dies during 5-year period, amounts allocable to years after death are includible in contributor’s gross estate. Consult your tax advisor for more information.

13. Since offering one of the first 529 college savings plans in the country a decade ago, Putnam Investments has been helping families across America build their futures.
Putnam’s college savings plan — Putnam 529 for America — is backed by Putnam’s expertise in 529 plan administration, industry-recognized customer service, and investing expertise.
Investors across the country can invest in the plan and proceeds can be used to attend school in any state.
Putnam has over 75 years of investment experience. The firm was founded in 1937 with one of the first mutual funds to combine stocks and bonds in a single portfolio. Today, Putnam offers a wide range of stock, bond, multi-asset, and absolute return portfolios designed for diverse financial goals.

14. A wide range of investment choices
Age-based portfolios
Goal-based portfolios
Individual fund options from Putnam and other firms
Putnam Absolute Return Funds
Putnam 529 for America offers many ways to invest your college savings.

15. Age-based portfolios
Actively managed and adjusted over time, becoming more conservative as your child approaches college age
Newborn 4 8 12 18
Stocks
Bonds
Cash
15%
14%
26%
85%
60%
Think of the age-based portfolios as being on “automatic pilot.” As the child approaches college age, each portfolio automatically becomes more conservative — with fewer stocks and more fixed-income investments. In addition, the portfolio is rebalanced quarterly to make sure it stays on track.
For example, you will see that the newborn portfolio begins with a ratio of 85% stocks and 15% bonds. When the beneficiary is age 18, the investment mix is considerably more conservative — 14% stocks, 26% bonds, and 60% cash.
Asset allocations shown are target allocations. Actual allocations may vary.
The age-based and goal-based options invest across four broad asset categories: short-term investments, fixed-income investments, U.S. equity investments, and non-U.S. equity investments. Within these categories, investments are spread over a range of asset allocation portfolios that concentrate on different asset classes or reflect different styles.
Each age-based portfolio has a different target date, which is based on the year in which the beneficiary of an account was born. The principal value of the funds is not guaranteed at any time, including age-based portfolios closest to college age.

16. Goal-based portfolios
Actively managed and keep the same allocation mix, regardless of the child’s age
Balanced
Growth
Aggressive growth
34%
15%
Stocks
Bonds
Cash
100%
60%
85% 6%
Balanced Option
Growth Option
Aggressive Growth Option
Putnam 529 GAA Growth Portfolio
Putnam 529 Balanced Portfolio
Putnam 529 Money Market Portfolio
Invests in the Putnam 529 GAA Growth Portfolio and Putnam 529 All Equity Portfolio
Invests in the Putnam 529 GAA All Equity Portfolio
Goal-based portfolios are designed to meet specific goals and levels of risk tolerance. Each portfolio maintains the same investment mix, regardless of the age of the child.
Let’s look at the balanced portfolio, which is designed to offer a balanced approach, with more moderate potential returns and less risk than the growth or aggressive growth portfolios. It typically has a mix of 60% stocks, 34% bonds, and 6% cash, with maximum and minimum band ranges, although the target allocation may change from time to time as market conditions warrant.
The Growth Portfolio offers potentially higher returns with a greater risk of principal loss. It has a targeted allocation of 85% stocks and 15% bonds. It may help you accumulate savings more rapidly than the Balanced Portfolio, but it comes with the potential for greater risk.
The Aggressive Growth Portfolio offers the potential for the highest returns over time, along with a correspondingly higher risk of principal loss. It has a targeted allocation of 100% stocks.
Allocations shown are target allocations; actual allocations may vary. See the offering statement for details.

17. Individual investment options
Build your own portfolio with a range of choices
Stocks
Bonds
Cash
Putnam Equity Income Fund Option
Putnam International Capital Opportunities Fund Option
Putnam Voyager Fund Option
Putnam Small Cap Value Fund Option
MFS Institutional International Equity Fund Option
Principal MidCap Fund Option
SSgA S&P 500® Index Fund Option
Putnam High Yield Trust Option
Putnam Income Fund Option
Federated U.S. Government Securities Fund: 2–5 years Option
Capital preservation money market: Putnam Money Market Fund Option*
You may also build your own portfolio of investment options. Putnam 529 for America offers several options that invest in a variety of professionally managed mutual funds.
The options cover the risk/reward spectrum so you can create a portfolio tailored to your specific needs.
* Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund. Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency.
The plan involves investment risk, including the loss of principal.

18. Absolute Return Funds
Putnam 529 for America is the only 529 account to offer a suite of absolute return funds as an investment option
The funds target positive 3-year returns of 1%, 3%, 5%, or 7% above the return on T-bills and with lower relative volatility
+7%
+5%
Absolute return investing can be an ally in helping to navigate today’s market volatility
+3%
+1%
Finally, I want to tell you about a feature that’s unique to Putnam 529 for America — the option to invest in Putnam Absolute Return portfolios.
Absolute Return portfolios are designed to help you meet your college savings goals while pursuing lower volatility than more traditional mutual fund investments.
The funds seek a positive return that exceeds the return on Treasury bills over a period of three years, regardless of market conditions.
If you are concerned about market volatility, you might consider these portfolios.
Chart does not represent the performance of Putnam Absolute Return Funds. Actual performance can be found on putnam.com.
The funds’ strategies are designed to be largely independent of market direction, and the funds are not intended to outperform stocks and bonds during strong market rallies. There is no guarantee that the funds will meet their objectives.

19. Putnam Absolute Return Funds
Putnam Absolute Return 100 Fund® option
Putnam Absolute Return 300 Fund® option
Putnam Absolute Return 500 Fund® option
Putnam Absolute Return 700 Fund® option
For investors considering short-term securities. Invests in bonds and cash instruments.
For investors considering a bond fund. Invests in bonds and cash instruments.
For investors considering a balanced fund. Can invest in bonds, stocks, or alternative asset classes.
For investors considering a stock fund. Can invest in bonds, stocks, or alternative asset classes.
Consider these risks before investing: Our allocation of assets among permitted asset categories may hurt performance. The prices of stocks and bonds in the funds’ portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including both general financial market conditions and factors related to a specific issuer or industry. Our active trading strategy may lose money or not earn a return sufficient to cover associated trading and other costs. Our use of leverage obtained through derivatives increases these risks by increasing investment exposure. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. Our use of derivatives may increase these risks by increasing investment exposure (which may be considered leverage) or, in the case of many over-the-counter instruments, because of the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. The funds may not achieve their goal, and they are not intended to be a complete investment program. The funds’ effort to produce lower-volatility returns may not be successful and may make it more difficult at times for the fund to achieve their targeted return. In addition, under certain market conditions, the funds may accept greater volatility than would typically be the case, in order to seek their targeted return.
For the 500 Fund and 700 Fund these risks also apply: REITs involve the risks of real estate investing, including declining property values. Commodities involve the risks of changes in market, political, regulatory, and natural conditions. Additional risks are listed in the funds’ prospectus. You can lose money by investing in the funds.
There are four Absolute Return choices. They seek returns that exceed the rate of inflation by 1% (100 Fund), 3% (300 Fund), 5% (500 Fund), and 7% (700 Fund)
The funds invest in a wide range of securities in markets around the globe. The mix of investments is shifted as opportunities change, and the funds use progressive tools to help control risk.
The funds have the potential to outperform general markets during periods of flat or negative returns.
Since 1999, Putnam has managed absolute return strategies for institutional clients.

20. Now, a 529 plan is an investment account
Now, a 529 plan is an investment account. Let’s talk about ways to make the most of this investment.

21. $500 monthly contributions at a hypothetical 6% annual growth rate
$193,677
Hypothetical 529 account value
Your savings accumulate faster because account is not taxed
$81,940
$163,477
Hypothetical taxable account value
$75,007
$34,885
$33,446
5 years
10 years
18 years
First, let’s take a look at the benefit of tax-deferred savings. As this example shows, your savings will accumulate faster than they would in a taxable account because there is no tax on your earnings.
This example assumes contributions of $500 per month, a hypothetical 6% nominal rate of return compounded monthly with an effective return of 6.17%, and a 28% tax bracket for the taxable account. Performance shown is for illustrative purposes and is not related to an actual investment. Regular investing does not ensure a profit or protect against loss in a declining market. Capital gains, exemptions, deductions, and local taxes are not reflected. Certain returns in a taxable account are subject to capital gains tax, which is generally a lower rate than ordinary income tax rates and would make the investment return for the taxable investment more favorable than reflected on the chart. Investors should consider their personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision. These may further impact the results of the comparison.

22. Start early, contribute often
The Jones family starts saving today, contributing $340 every month
Total contribution
$73,440
Earnings
$89,714
Account value
$163,154
after 18 years
The Smith family waits 10 years to start saving, contributing $1,219 every month
Total contribution
$117,024
Earnings
$46,130
Account value
$163,154
after 8 years
Another way to make the most of your 529 account is to take advantage of a time-tested strategy — start saving early, and contribute as much as you can.
In this example, the Jones family has a newborn and starts saving right away. Working with their financial advisor, they determined that they must contribute $340 each month to their account to pursue their goal.
The Smith family waits 10 years to start saving. They can still meet their goal, but they have to contribute considerably more — $1,219 — each month.
The sooner you start contributing, the easier it will be to pursue your college savings goals.
Remember, systematic investing does not assure a profit or protect against loss. You should consider your ability to continue investing during periods of low prices.
This chart is for illustrative purposes only and is not intended to be representative of past or future performance. The Jones family saves $340 monthly for 18 years. The Smith family saves $1,219 monthly for 8 years. Assumes a hypothetical 8% annual return compounded monthly.

23. Let the whole family contribute
The Jones grandfather makes an initial contribution of $14,000
Total contribution
$62,816
The Jones parents contribute $226 every month
Earnings
$104,491
Account value
$167,307
after 18 years
In this example, we see what financing a college education might be like if the whole family gets involved. The Jones grandfather makes an initial lump-sum contribution of about $14,000, leaving the Jones parents to contribute $226 a month in order to meet their savings goals.
This chart is for illustrative purposes only and is not intended to be representative of past or future performance. The Jones grandfather makes a lump-sum contribution of $14,000 today. The Jones parents contribute $226 each month.
Assumes a hypothetical 8% annual return compounded monthly.

25. How much can you contribute?
No minimum investment
Contributions can occur until the account value reaches $370,000*
Contribute five years’ worth of gifts in a single year
You can contribute as much or as little as you wish until the account value reaches $370,000. Anyone else can contribute to the account as well.
As we discussed earlier, you can also make five years’worth of contributions all at once, putting up to $70,000 (or $140,000 for couples filing jointly) to work in your account without triggering the federal gift tax.
This may be a lot more money than you have on hand, but it may make sense for a grandparent or other relative who wants to help and is also looking for a way to reduce the size of his or her taxable estate.
  A gift of $70,000 in 2016 would constitute five years’ worth of gifts. Additional gifts made for the same beneficiary in the same five-year period would be subject to federal gift taxes. Election is made by filing a federal gift tax return. If the electing contributor dies during the 5-year period, amounts allocable to year after death are inducible in the contributor’s gross estate.
* Contribution limit as of 1/1/16. Subject to periodic review.

26. Many ways to contribute
Invest a lump sum
Establish a dollar cost averaging program
Establish a systematic investment program from your bank
Encourage contributions with gift certificates
There are a number of ways to contribute to the account:
You can make a lump-sum investment
You can sign up for a systematic investment plan using payroll or bank account deductions
A dollar cost averaging program allows you to gradually transfer a lump-sum contribution from one investment option to another
You can order gift certificates that friends and relatives can use to make contributions to your account.
Systematic investing and dollar cost averaging do not assure a profit or protect against loss in a declining market. You should consider your ability to continue investing during periods of low prices.
Systematic investing and dollar cost averaging do not assure a profit or protect against loss in a declining market. You should consider your ability to continue investing during periods of low prices.

27. Withdrawals are easy You tell us how to make out the check
Mail the completed form to Putnam Investments
When you’re ready to withdraw your savings, simply fill out a single form, indicate how the check should be made out, and mail the form to Putnam. The money can then be sent to the account owner, to the beneficiary, or directly to the college or university the student is attending.
Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply.

28. Contact [insert broker name] Call 1-877-PUTNAM529 Visit putnam.com/529
Contact me. I’m here to answer any questions you have about saving for college or Putnam 529 for America.
You can also access and manage your account online, or call PUTNAM529 for assistance.
Thank you for coming.

29. Delete “They are the faces of the future”
Not FDIC Insured
May Lose Value
No Bank Guarantee