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North Carolina

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Title: North Carolina s National College Savings Program Your NC 529 Plan Author: Brooke Fussell Last modified by: Cedric Barksdale Created Date – PowerPoint PPT presentation

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Title: North Carolina


1
North Carolinas National College Savings
Program Your NC 529 Plan
2
North Carolinas 529 Plan
  • Most families will pay at least a portion of
    their childrens (or other family members)
    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.

3
North Carolinas 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.

4
North Carolinas 529 Plan
  • The North Carolina General Assembly authorized a
    529 Program for the State in 1996.
  • 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
    Carolinas National College Savings Program (the
    NC 529 Plan).

5
North Carolinas 529 Plan
  • North Carolinas 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.

6
North Carolinas 529 Plan
  • Accessible
  • Affordable
  • Tax-free earnings 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
Carolinas 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.
7
North Carolinas 529 Plan
  • Accessible
  • Any adult can open an account to help anyone
    who plans to go to college, regardless of the
    beneficiarys 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.

8
North Carolinas 529 Plan
  • Affordable
  • Low total annual asset-based fees and expenses
    (range from 0.25 to only 0.42)
  • Low Account fee (1.50/month) for paper
    statements and other communication fee waived if
    you elect to receive all communication
    electronically (e-delivery)
  • Minimum Contribution as low as 25
  • Contribute when you want, how you want
  • On-occasion or regularly scheduled
  • Lump-sum or automatic

9
North Carolinas 529 Plan
  • Lump Sum
  • Personal Check
  • Electronic Funds Transfer (EFT)
  • Money Orders
  • Transfer or Rollover from
  • Another Section 529 account
  • Coverdell Education Savings Account
  • Qualified Savings Bond (Series EE or I issued
    after 1989)

10
North Carolinas 529 Plan
  • Automatic Investment Plans
  • Recurring 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

11
North Carolinas 529 Plan
  • Tax-free
  • North Carolina residents Account earnings are
    free from federal and North Carolina income taxes
    when 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.

12
North Carolinas 529 Plan
  • Flexible
  • Savings may be used for the beneficiarys college
    costs at virtually any college, anywhere.
  • May change future contributions any time.
  • May reallocate current funds once each calendar
    year.

13
North Carolinas 529 Plan
  • Comprehensive
  • Select investment options that meet your
    objectives, fit the time remaining until your
    beneficiary needs the money for college, and
    match your tolerance for risk.
  • You may choose one or more of the following
    options.

14
North Carolinas 529 Plan
  • 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 Treasurers Short Term Investment
    Portfolio (STIP)

15
North Carolinas 529 Plan
  • Federally-Insured Deposit Account (Offered by
    State Employees Credit Union)
  • Provides income plus protection of principal and
    earnings through federal deposit insurance
  • The principal contributed and interest earned are
    insured by the National Credit Union
    Administration
  • Available to members and non-members of the State
    Employees Credit Union

16
North Carolinas 529 Plan
  • Three Vanguard Age-Based Investment Options
  • Beneficiarys age determines placement within the
    risk track selected
  • Age-Based Portfolios
  • Aggressive Track
  • Moderate Track
  • Conservative Track

17
North Carolinas 529 Plan
Vanguard Age-Based Investment Options Vanguard Age-Based Investment Options Vanguard Age-Based Investment Options Vanguard Age-Based Investment Options
Age of Beneficiary Aggressive Track Moderate Track Conservative Track
Newborn-5 Vanguard Aggressive Growth Portfolio Vanguard Growth Portfolio Vanguard Moderate Growth Portfolio
6-10 Vanguard Growth Portfolio Vanguard Moderate Growth Portfolio Vanguard Conservative Growth Portfolio
11-15 Vanguard Moderate Growth Portfolio Vanguard Conservative Growth Portfolio Vanguard Income Portfolio
16-18 Vanguard Conservative Growth Portfolio Vanguard Income Portfolio Vanguard Income Portfolio
19 older Vanguard Income Portfolio Vanguard Income Portfolio Vanguard Money Market Portfolio
18
North Carolinas 529 Plan
Vanguard Individual Investment Options Vanguard Individual Investment Options
INDIVIDUAL PORTFOLIOS DESCRIPTION
Vanguard Aggressive Growth Portfolio Seeks growth of capital.
Vanguard Growth Portfolio Seeks growth of capital and low to moderate income.
Vanguard Moderate Growth Portfolio Seeks growth of capital and current income.
Vanguard Conservative Growth Portfolio Seeks current income and low to moderate growth of capital.
Vanguard Income Portfolio Seeks current income.
Continued on next screen
19
North Carolinas 529 Plan
Vanguard Individual Investment Options Vanguard Individual Investment Options
INDIVIDUAL PORTFOLIOS DESCRIPTION
Vanguard Money Market Portfolio Seeks to provide income consistent with the preservation of principal.
Vanguard Total Stock Market Index Portfolio Seeks to track the performance of a benchmark index that measures the investment return of the overall stock market.
Vanguard Total International Stock Index Portfolio Seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in developed and emerging markets, excluding the United States.
Vanguard Total Bond Market Index Portfolio Seeks to track the performance of a broad, market-weighted bond index.
Investment in the Money Market Portfolio is not
insured or guaranteed by the FDIC 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 fund may lose money by investing in the
underlying fund. Investments are subject to
risk and Participants should carefully read the
Program Description for North Carolinas National
College Savings Program for more information.
20
North Carolinas 529 Plan
  • Online access at CFNC.org/NC529 for
  • Easy Enrollment
  • Account Information
  • Account Maintenance
  • Frequently Asked Questions
  • Savings Calculator
  • Representatives available to answer your
    questions Monday Thursday 8 am - 8 pm and
    Friday 8 am - 5 pm toll free 800-600-3453 or
    local line 919-828-4904 (Raleigh).

21
Comparison of College Savings Programs
North Carolinas 529 Plan (for higher education) Coverdell Education Savings Account (formerly Education IRA) (for secondary or higher education)
Who can contribute Anyone Anyone
Annual contributions 410,000(for 2014) Reviewed annually 2,000 per beneficiary/per year
Account owner/control Participant (Account owner) Beneficiary may obtain control at age of majority
Age of Beneficiary for contributions Any age Up to age 18 (age limit does not apply in case of special needs Beneficiary)
Taxes on qualified withdrawals No federal or North Carolina income taxes No federal or North Carolina income taxes
Timing of withdrawals Whenever the Beneficiary goes to college Beneficiary receives remainder in account at age 30
Income restriction None Adjusted Gross Income limits apply phases out at 110,000 (single filers) and 220,000 (joint filers)

22
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.
23
How are 529 Plans reported on FAFSA
  • Considered an Investment/Asset
  • Includes qualified educational benefits or
    education savings accounts (e.g., Coverdell
    savings accounts, 529 college savings plans and
    the refund value of 529 prepaid tuition plans)
  • Students Asset
  • Question 42. As of today, what is the net worth
    of your (and spouses) investments, including
    real estate? Dont include the home you live in.
    Net worth means current value minus debt.
  • For a student who does not report parental
    information, the accounts owned by the student
    (and/or the students spouse) are reported as
    student investments

24
How are 529 Plans reported on FAFSA
  • Parents Asset
  • Question 91. As of today, what is the net worth
    of your parents investments, including real
    estate? Dont include the home in which your
    parents live. Net worth means current value minus
    debt.
  • For a student who must report parental
    information, the accounts are reported as
    parental investments, including all accounts
    owned by the student and all accounts owned by
    the parents for any member of the household

25
How are 529 Plans reported on FAFSA
  • Students Untaxed Income
  • Question 45 j. Money received, or paid on your
    behalf (e.g., bills), not reported elsewhere on
    this form. This includes money that you received
    from a parent whose financial information is not
    reported on this form and that is not part of a
    legal child support agreement.
  • Includes distributions to the student beneficiary
    from a 529 plan that is owned by someone other
    than the student or his parents (such as
    grandparents, aunts, and uncles)

26
How 529 Plans Impact Financial Aid
  • If owned by the students or parents - reduces
    need-based aid by maximum of 5.64 of total asset
    value
  • If owned by independent student reduces
    need-based aid by maximum of 20 of total asset
    value
  • If owned by grandparents, etc. withdrawals
    count as untaxed income for the following FAFSA
    filing year. May reduce need-based aid by 50 of
    withdrawal amount

27
NC 529 Scholarship Contest
  • Sponsored by the NC 529 Plan and SECU
  • 1 winner from each of 100 counties
  • 529 Scholarship
  • Random drawing held May 29
  • Current NC 529 account holders automatically
    entered per account
  • Non-NC 529 account holders must enter (If
    contest participant wins, must open a NC 529
    account to receive scholarship)

28
NC 529 Scholarship Contest
  • Enter online at NC529Scholarship.org OR
  • Enter by mailing a 4x6 postcard to
  • NC529 Scholarship Contest
  • 300 South Liberty Street
  • Suite 100
  • Winston-Salem, NC 27101
  • -Provide name and age as of April 30, 2014
  • -Home address and county of residence
  • -Statement that you are a legal NC resident
  • -Email/phone number
  • -Name of potential beneficiary/relationship

29
Enrollment Forms and Other Information
  • Online CFNC.org/NC529
  • E-mail Savings_at_CFNC.org
  • Toll free Number 800-600-3453
  • Raleigh Number 919-828-4904

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
Carolinas 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.
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