New Yorks 529 College Savings Program Direct Plan

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New Yorks 529 College Savings Program Direct Plan

• Be Ready When the Bell Rings for College

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Todays Agenda

• The goal of college
• How New Yorks 529 College Savings Program
  Direct Plan can help
• Additional savings through Upromise Rewards
• Important considerations
• To learn more

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The cost of college may be rising
Estimated Cost of One Year at College
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but there is hope.

• Most students receive some form of financial aid
  either grants, scholarships, work-study or
  student loans.
• In 2002-2003, total aid per full-time equivalent
  student averaged about 9,100 (3,600 of which
  was in grant aid).

• There are more ways than ever to save for college
  and more federal and state tax benefits for doing
  so.
• Congress has enabled states to create savings
  plans under Section 529 of the Internal Revenue
  Code.
• Each State can develop its own unique program.

The College Board, Trends in Student Aid 2003.
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Todays Agenda

• The goal of college
• How New Yorks 529 College Savings Program Direct
  Plan can help
• Additional savings through Upromise Rewards
• Important considerations
• To learn more

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A Partnership for New York
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Before and After the Transition from TIAA

• On November 14, 2003, all Program accounts and
  assets previously managed by TIAA-CREF
  transitioned to Upromise and Vanguard.

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Key Features and Benefits of the Program

• Significant Federal and State Tax Advantages
• Broad Eligibility and Flexibility
• Low Fees and Minimums, High Contribution Limit
• Professional Investment Management by Vanguard
• Additional Savings through the Free Upromise
  Rewards Service
• Convenient Online Account Opening and Account
  Management

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Federal and State Tax Considerations

• Only 529 program to offer New York taxpayers a
  State tax deduction
• Can deduct up to 5,000 of contributions on state
  income tax return each year (10,000 for married
  couples filing jointly)

• Federal and State income tax-deferred growth
• Earnings grow federal and State income tax
  deferred until withdrawn

• Federal and State income tax-free qualified
  withdrawals for higher education
• Withdrawals for tuition, fees, room and board,
  books, and required supplies
• Any qualifying post-secondary institution in the
  U.S., including public and private colleges and
  universities, 2- and 4-year programs, and
  vocational schools

Unless extended, federally tax-free treatment
of qualified withdrawals will expire after
December 31, 2010.
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Broad Eligibility and Flexibility
Account Owner (Person Who Controls the Account)
Beneficiary (Student for Whose Benefit the
Account is Opened)

• Any U.S. citizen or resident alien
• Parents, grandparents, relatives, and even
  friends
• No age or income limitations
• Multiple account owners can open accounts for the
  same beneficiary
• Account owner retains control of how and when the
  money is used

• Any U.S. citizen or resident alien
• Your children, yourself, your spouse, relatives,
  and even friends
• No age or income limitations
• Account owner can change beneficiaries to a
  qualifying family member of the current
  beneficiary without taxes or penalties

If beneficiary does not attend college, account
owner can
(1) leave the
money in the account until a later date,

(2) change beneficiaries, or
(3) make a non-qualified withdrawal
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Federal and State Tax Considerations

• Non-qualified withdrawals subject to federal and
  State taxes
• Subject to federal and State income tax on
  earnings, plus a 10 federal penalty tax on
  earnings
• Any portion attributable to contributions for
  which a New York State tax deduction was
  previously claimed will be subject to New York
  personal income tax
• Rollovers to another states 529 plan are
  considered non-qualified withdrawals for State
  income tax purposes

• Withdrawals Due to Death, Disability or
  Scholarship
• Subject to federal income tax on earnings, but
  not the 10 federal penalty tax
• Withdrawals due to death or disability of
  beneficiary not subject to NY State tax
• Withdrawals due to a beneficiary scholarship are
  subject to NY State tax to the extent they
  represent earnings and previously deducted
  contributions

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Low Fees, Low Minimums, and High Maximum

• One of the Lowest Management Fees of Any 529 Plan
• 0.58 of your investment annually (no other fees)

• Low Minimum Contribution Amounts
• 25 minimum for initial and ongoing contributions
  (EFT or check)
• 25 minimum for AIP (bi-monthly, monthly,
  quarterly)
• 15 for contributions made through payroll
  deduction

• High Maximum Contribution Limit
• Contribute until the total balance of all Program
  accounts for the same beneficiary reaches an
  aggregate maximum, which is currently 235,000
  (earnings can continue to accrue after reaching
  the maximum)

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Professional Investment Management by Vanguard

• One of the Most Trusted Investment Management
  Companies
• Largest pure no-load mutual fund company in the
  world
• Over 600 Billion in assets under management
• Commitment to high-value, low-cost investing and
  client service
• Commitment to plain talk with customers

• 15 Vanguard Investment Options for the Program
• 3 age-based options and 12 individual portfolios
• Choose up to 5 investment options per account
• Reallocate among investments once per calendar
  year or when you change beneficiaries
• Vanguard education investment specialists
  available to help

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3 Age-Based Vanguard Investment Options

• Conservative, moderate, and aggressive options
• Contributions are invested according to your risk
  tolerance and the age of your beneficiary
• As your beneficiary ages, your assets are
  automatically shifted to more conservative
  investments to seek to protect your capital

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12 Vanguard Individual Portfolios

• 5 Stock Portfolios (100 stock funds)
• Aggressive Growth Portfolio
• Growth Stock Index Portfolio
• Mid-Cap Stock Index Portfolio
• 3 Balanced Portfolios (mix of stock and bond
  funds)
• Conservative Growth Portfolio
• Growth Portfolio
• 3 Bond Portfolios (100 bond funds)
• Bond Market Index Portfolio
• Income Portfolio
• 1 Interest Accumulation Portfolio (100
  short-term investments)

• Choose from among these options if you wish to be
  more aggressive or more conserv-ative than the
  age-based options allow.
• Unlike the age-based options, your allocation
  among individual portfolios will remain fixed
  until you instruct the Program to change it.

Small-Cap Index Portfolio Value Stock Index
Portfolio
Moderate Growth Portfolio
Inflation-Protected Securities Portfolio
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Todays Agenda

• The goal of college
• How New Yorks 529 College Savings Program
  Direct Plan can help
• Additional savings through Upromise Rewards
• Important considerations
• To learn more

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Additional Savings with Upromise Rewards

• Upromise Rewards is a free, optional service that
  can add to your savings
• Join Upromise for free through www.nysaves.org
• Register your credit, debit, grocery and drug
  store cards
• Get money back for college when you buy gas, dine
  out, shop online, buy groceries, and
  more
• Link your Upromise Rewards account to your New
  York 529 account and have your Upromise savings
  transferred automatically on a periodic basis
• Hundreds of leading companies will help you save
  for college

and many more
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Save for College at the Grocery Store
Get money back for college on over 7,000
products
at your favorite New York grocery store (over
1,000 participating stores).
Just register your grocery cards with Upromise.
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From Everyday Expenses to Big Purchases
Save for college at over 50,000 stores,
restaurants, and services

• Bed Bath Beyond
• ADT
• America Online
• Many more

• Over 9,000 restaurants
• Over 7,000 Hotels
• Circuit City
• The Sharper Image

Shop online through Upromise and save at over
200 online retailers

• Barnes Noble.com
• Walmart.com
• JCPenney.com
• Many more

• Staples.com
• KBtoys.com
• Dell.com
• Sears.com
• Gap.com

Save more for college on big purchases

• Century 21
• Coldwell Banker
• ERA

• Chase Home Finance
• CitiMortgage
• Wachovia Mortgage

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Todays Agenda

• The goal of college
• How New Yorks 529 College Savings Program
  Direct Plan can help
• Additional savings through Upromise Rewards
• Important considerations
• To learn more

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Financial Aid and Other Considerations

• State and Federal Financial Aid Consideration
• Program assets not included in New York State
  financial aid determination
• Considered parental asset (not the students
  assets) for federal financial aid purposes if
  parent is the account owner which means that a
  smaller percentage is considered available for
  federal financial aid purposes

• Hope and Lifetime Learning Credit Eligibility
• Qualified withdrawal will not impact eligibility
  for the Hope Scholarship or Lifetime Learning tax
  credits, provided that the withdrawal is not used
  for the same expenses for which the credit was
  claimed

• Special gift, estate, and generation skipping
  transfer tax considerations
• Contributions are considered completed gifts and
  are generally removed from the account owners
  estate
• Can contribute up to 55,000 in a single year
  (110,000 for married couples filing jointly)
  without federal gift, estate, or generation
  skipping transfer tax consequences, provided no
  more gifts are made to the beneficiary for 5
  years

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No Guarantee Other Important Program Disclosure
New York's 529 College Savings Program Direct
Plan is described in the current applicable
Program Brochure and Tuition Savings Agreement.
Accounts are opened by completing an Enrollment
Form. All of these should be read carefully
before opening an account. None of the State of
New York, its agencies, the Federal Deposit
Insurance Corporation (FDIC), The Vanguard Group,
nor Upromise insures accounts or guarantees the
principal deposited therein or any investment
returns on any account or investment portfolio.
The value of your account will vary based on
market conditions and the performance of the
investment options you select, and may be more or
less than the amount you deposit. Tax benefits
are subject to certain limitations and certain
withdrawals are subject to federal, state and
local taxes. If you are a resident or taxpayer
of another state, you should consider whether
that state offers a 529 Plan with tax or other
benefits that are not available through this
Program. You should consult your tax advisor.
Investments may be made through Upromise
Investments, Inc. and Vanguard Marketing
Corporation, as distributors.  
  New York's 529 College Savings Program
currently includes two separate 529 plans. The
Direct Plan is sold directly by the Program. You
may also participate in the Advisor Plan, which
is sold exclusively through financial advisors
and offers investment options that are not
available under the Direct Plan. However, the
fees and expenses of the Advisor Plan are higher
and include financial advisor compensation. Be
sure to understand the options available before
making an investment decision.
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Todays Agenda

• The goal of college
• How New Yorks 529 College Savings Program
  Direct Plan can help
• Additional savings through Upromise Rewards
• Important considerations
• To learn more

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Were Here to Help!!

• Visit www.nysaves.org to learn more about the
  Program, request an information kit, and even
  enroll online.
• Call 1-877-NYSAVES (1-877-697-2837) to speak with
  a Program representative at Vanguard. Monday
  through Friday, 8 a.m. to 9 p.m.