Georgia 529 College Savings Plan

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Georgia529 College Savings Plan
It all starts with an education...
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AGENDA

• Program Purpose
• How It Works
• Tax Benefits Value
• Using Your Savings
• Why Save for College?
• Management
• Enrollment
• Program Highlights
• Payroll Deduction

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Program Purpose
Georgia Higher Education Savings Plan is designed
to

• Provide a tax advantaged savings program to help
  meet postsecondary educational costs

(2) Encourage timely financial planning for
higher education
(3) Promote consistent long-term saving.
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How it Works
The plan makes savings trust accounts available
to the public...

• Account contributors make contributions on
  behalf of qualified beneficiaries. Parents,
  grandparents, and family members can open these
  accounts for their children. The beneficiary does
  not have to be a family member. You can even open
  an account for yourself.
• The contributions grow based on the earnings of
  the investment option you choose.
• Although the state cannot guarantee that savings
  will be enough to pay all education expenses, the
  program provides federal and state tax advantages
  to help your contributions grow.

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How it Works

• Contributions and investment earnings may be
  used for any qualified
• higher educational expense of the designated
  beneficiary. These expenses
• include tuition, fees, books, supplies, room
  and board, and required
• equipment.
• The GHESP complements the HOPE scholarship
  program by providing
• coverage for expenses not covered by the HOPE
  program.
• Plan investments can be used at virtually any
  college or university in the U.S.

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How it Works
There are five investment options with varying
degrees of investor risk. 1- Managed Allocation
Option 2- Aggressive Managed Allocation
Option 3- 100 Equity Option 4- Balanced
Fund Option 5- Guaranteed Option
LEARN MORE IN THE PROGRAM DISCLOSURE BOOKLET
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Tax Benefits Value

• Your contributions may be deductible from your
  Georgia taxable income
• if the beneficiary is a dependent on your
  Georgia tax return.

• Taxpayers filing an itemized return can reduce
  their taxable income by
• up to 2,000 when filing jointly with an
  adjusted gross income of up
• to 100,000 (50,000 for single filers).

• This tax deduction is reduced by 400 for each
  1,000 of income
• above 100,000 adjusted gross income for
  taxpayers filing jointly
• (50,000 for single filers).

• The deductible is available for each
  beneficiary.

LEARN MORE IN THE PROGRAM DISCLOSURE BOOKLET
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Tax Benefits Value

• You can contribute until the account balance
  reaches 235,000
• per beneficiary.

• There is no annual contribution cap.

LEARN MORE IN THE PROGRAM DISCLOSURE BOOKLET
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Using Your Savings
The plan provides several tax advantages
including

• You pay no federal or state taxes on earnings as
  your account grows.

• You pay no federal or state tax on distributions
  from the
• account if the distributions are used for
  qualified educational expenses.

• Through compounding, the money you save in a
  tax-deferred
• account can provide greater growth.

LEARN MORE IN THE PROGRAM DISCLOSURE BOOKLET
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Using Your Savings
You can withdraw your savings, but the earnings
portion of a non-education related withdrawal is
subject to income tax and an additional 10
federal tax.

• You can withdraw contributions and earnings
  without the additional 10 federal tax if

• The beneficiary dies or becomes disabled.

• The beneficiary receives a scholarship.

• You can rollover (transfer) a college savings
  plan account to another beneficiary.

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Why Save for College?

• Annual tuition increases continue to exceed the
  annual inflation rate
• Financial aid is ever-changing
• Scholarships do not always cover all expenses
• Increased earning potential
• Long-term consistent saving is more financially
  feasible

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Why Save for College?

• 2003-2004 College Costs
• 4-year private up 6
• 4-year public up 14.1
• 2-year public up 13.8

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Why Save for College?

• Financial Aid
• Make up the difference between what your family
  can afford to pay and what college costs.
• Students and their families are expected to
  contribute to the cost of college to the extent
  they are able.
• Of the 105.1 billion in student aid distributed
  during 2002-2003, 52.6 was loans (federal and
  nonfederal) and only 35.9 grant aid.
• Just a decade ago, these numbers were reversed
  with approximately 50 of the total aid
  distributed being free money (i.e. grants) and
  only approximately 30 representing loans.

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Why Save for College?
Greater Earning Potential People with a
bachelors degree earn over 60 more on
average than those with a high school
diploma. Over a lifetime, the gap in earning
potential between a high school diploma and
a B.A. (or higher) is more than
1,000,000. Short-term sacrifices incurred now
more than repaid in the long-term.
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Why Save for College?

• Time Is Money
• Long-term consistent saving provides for
  compounded interest, thus your money works harder
  for you.
• Early, consistent saving along the way is more
  manageable than paying large, lump-sum tuition
  and housing bills.

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Why Save for College?
Monthly Investment
6 Years
12 Years
18 Years
Assumes an initial investment of 5,000 with an
8 annual return
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Management

• Your contributions are managed by investment
  professionals.
• Tuition Financing, Inc. (TFI) is the nations
  most experienced program
• manager for 529 savings plans. TFI provides
  investment management,
• marketing and administrative services for the
  GHESP.

• TFI is part of TIAA-CREF, a eighty-year-old
  financial services organization
• with over 2 million participants and more than
  290 billion in managed assets.

• TIAA-CREF has a reputation for solid investment
  performance,
• trustworthiness, great customer service, and
  low fees.
• Total management fee less than 1 (0.85)
  annually.

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Management
The State cannot use the money in your college
savings plan account.

• State law provides that the contributions and
  earnings for college savings accounts will be
  held in a separate trust fund and shall not
  constitute the property of the State.
• Investments are held in individual trust
  accounts that are managed by investment
  professional at TIAA-CREF.

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Enrollment
1. You can enroll online or download enrollment
materials by visiting
www.GAcollegesavings.com
2. You can have enrollment materials mailed to
you by calling 877 424-4377
An account may be opened with as little as 25 !
(15 if you elect payroll deductions!)
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Program Highlights

• As of September 3, 2004
• Over 187 million in total program assets
• Over 44,000 accounts opened
• Clark Howard says we are privileged in Georgia
  to have one of the best college savings plans in
  the country and he includes the Georgia Higher
  Education Savings Plan in his Honor Roll of top
  Section 529 plans.
• Mike Kavanagh of WSB radios Money Matters
  business and financial talk show calls Georgias
  college savings plan the best (plan) for Georgia
  residents and says they got it right in the
  design of the Georgia plan.
• SavingForCollege.com, Joe Hurleys web site,
  which is nationally recognized as the leading
  site for information about Section 529 plans,
  gives Georgias program one of its highest
  ratings (four and one-half out of five caps).
  

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Payroll Deduction

• Many private employers are offering payroll
  deduction for the Georgia Higher Education
  Savings Plan
• HB 1118 allows state employees to participate by
  payroll deduction
• Summary of HB 1118
• Authorizes deductions from wages or salaries of
  state employees, with moneys to be remitted to a
  GHESP account
• Deduction is allowed only with employees written
  and voluntary consent
• Employee may end the deduction upon written
  notice to the employer
• Agency personnel do not incur liability for
  administrative errors

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GHESP
THANKS !
www.GAcollegesavings.com 877 - 424 - 4377