North Carolina

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North Carolinas National College Savings
ProgramYour NC 529 Plan
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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.

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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.

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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).

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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.

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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.
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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.

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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

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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)

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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

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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.

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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.

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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.

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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)

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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

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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

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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
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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
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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.
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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).

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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 qualifiedwithdrawals 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)

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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.
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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

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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

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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)

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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

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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)

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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

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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.