1. “QUALIFIED TUITION PROGRAM” 529 Plans

2. What is a 529 Plan? Congress created them in 1996; named after section 529 of the Internal Revenue code Typically operated by state or educational institution Earnings not subject to federal tax and generally not subject to state tax when used for qualified education expenses Contributions to 529 plans are not deductible Can be spent at most accredited college and graduate schools, including professional and trade schools American Recovery and Reinvestment Act of 2009

3. 529 Plan Setup Must be over 18, designate a beneficiary of the plan No income restriction on the contributor or beneficiary No limit on the number of plans a person can set up Changing beneficiaries  No tax consequences  Funds are not taxable if rolled over to another plan for the benefit of the same beneficiary or the benefit of a member of the beneficiary’s family

4. Contribution Limits Cannot exceed the amount necessary to provide for the qualified education expenses of the beneficiary States enforce specific total contribution limits Contribution limit applies even if multiple people open an account for one beneficiary

5. Prepaid Tuition vs. College Savings Investment Prepaid tuition—lock in current costs of tuition in place of future prices, which rise every year College savings investment—more popular, cover expenses ranging from room and board to tuition to books

6. Investment Options In most cases, the contributed money will be invested in large, widely held mutual funds  Age-based option  “Static” choice  Cash-like options

7. Fees Related to 529 Plans Advisor Fee Total Asset-Based Fee Program Management, Maintenance and Administrative Fees Underlying Investment Fees

8. “9 Mistakes” – Forbes Forgetting about the fees Investing in a prepaid without reading the fine print Not taking advantage of gift tax exclusion Withdrawing too much money Using distributions to cover unqualified expenses Setting it and forgetting it Pulling out money to cover other expenses Passing up free rewards Starting too late

9. Kiplinger’s Best Hands-on investors: Utah Educational Savings Plan Low fees: New York’s 529 College Savings Program Age-based for aggressive investors: Maryland College Investment Plan Age-based for conservative investors: New York (may be too conservative) or Utah Nervous nellies: Virginia’s CollegeWealth plan with Union First Market Bank Hand-holding: Virginia’s College America Plan

10. MFS 529 Savings Plan (Advisor Sold) Program Manager: MFS Fund Distributors, Inc. Maximum contribution: $310,000 Minimum contribution start-up: $250 Age-based: 5 portfolios of underlying mutual funds Static: 4 multi-fund options; 14 individual-fund options State tax deduction: up to $2,265 individual, $4,530 married couple filing jointly Fees:  Enrollment or application: none  Account maintenance: $25 annually for accounts < $25,000, waived for residents  Program management:.10% management fee, various other fees  Underlying investments: 0.40%-0.93% (age-based/static) 0.33%-0.93% individual-fund  Asset-Backed expense ratio: Class A (0.73%-1.44%) Class B (1.56%-2.19%) Class C (1.57%-2.19%)

11. Oregon College Savings Plan (Consumer) Program Manager: TIAA-CREF Tuition Financing, Inc. Maximum contribution: $310,000 Minimum contribution: lump-sum $25, automatic payroll deduction $15 Age-based: 9 portfolios of underlying mutual funds Static: 7 multi-fund options; 6 single-fund options State tax deduction: up to $2,265 individual, $4,530 married couple filing jointly Fees:  Enrollment or application: none  Account maintenance: none  Program management:.23% management fee  Underlying investment: 0.09%-0.49%  Asset-backed expense ratio: 0.29%-0.71%

12. Additional Resources Morningstar’s 529 Plan Center  http://529.morningstar.com/state-map.action College Savings Plans Network  http://www.collegesavings.org/index.aspx savingforcollege.com State by State 529 Plan Guide  http://sites.savingforcollege.com/kiplinger/plan_details.php

13. References http://www.irs.gov/uac/529-Plans:-Questions-and-Answers http://www.irs.gov/uac/How-529-Plans-Help-Families-Save- for-College-and-How-the-American-Recovery-and- Reinvestment-Act-of-2009-Expanded-529-Plan-Features http://money.usnews.com/money/personal-finance/mutual- funds/articles/2014/09/03/the-ultimate-guide-to- understanding-529-college-savings-plans http://www.forbes.com/sites/learnvest/2013/07/18/529- savings-plans-9-mistakes-people-often-make/2/ http://www.kiplinger.com/article/college/T002-C000-S003- the-best-529-college-savings-plans-2014.html