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’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 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 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

North Carolina’s 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)

North Carolina’s 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

North Carolina’s 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.

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 once each calendar year.

North Carolina’s 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.

North Carolina’s 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 Treasurer’s Short Term Investment Portfolio (STIP)

North Carolina’s 529 Plan Federally-Insured Deposit Account (Offered by State Employee’s 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 Employee’s Credit Union

North Carolina’s 529 Plan Three Vanguard Age-Based Investment Options –Beneficiary’s age determines placement within the risk track selected Age-Based Portfolios Aggressive Track Moderate Track Conservative Track

North Carolina’s 529 Plan Vanguard Age-Based Investment Options Age of Beneficiary Aggressive TrackModerate TrackConservative Track Newborn-5 Vanguard Aggressive Growth Portfolio Vanguard Growth PortfolioVanguard Moderate Growth Portfolio 6-10 Vanguard Growth PortfolioVanguard Moderate Growth Portfolio Vanguard Conservative Growth Portfolio Vanguard Moderate Growth Portfolio Vanguard Conservative Growth Portfolio Vanguard Income Portfolio Vanguard Conservative Growth Portfolio Vanguard Income Portfolio 19 & older Vanguard Income Portfolio Vanguard Money Market Portfolio

North Carolina’s 529 Plan Vanguard Individual Investment Options INDIVIDUAL PORTFOLIOSDESCRIPTION Vanguard Aggressive Growth Portfolio Seeks growth of capital. Vanguard Growth PortfolioSeeks 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 PortfolioSeeks current income. Continued on next screen

North Carolina’s 529 Plan Vanguard Individual Investment Options INDIVIDUAL PORTFOLIOSDESCRIPTION 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 Carolina’s National College Savings Program for more information.

North Carolina’s 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 or local line (Raleigh).

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$410,000(for 2014) Reviewed annually $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 (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 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)

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.

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) Student’s Asset -Question 42. As of today, what is the net worth of your (and spouse’s) investments, including real estate? Don’t 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 student’s spouse) are reported as student investments

How are 529 Plans reported on FAFSA Parent’s Asset -Question 91. As of today, what is the net worth of your parents’ investments, including real estate? Don’t 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

How are 529 Plans reported on FAFSA Student’s 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)

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

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)

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 Provide name and age as of April 30, Home address and county of residence -Statement that you are a legal NC resident - /phone number -Name of potential beneficiary/relationship

Enrollment Forms and Other Information OnlineCFNC.org/NC529 Toll free Number Raleigh 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.