College costs are rising Figures include tuition, fees, room, and board. Estimated growth rate of 5.5%. Sources: The College Board, 2008; and www.FinAid.org, 2008. Four years of tuition, room, and board 2008 $148,210 Private college $62,238 Public college $163,154 2026 $388,528
College debt is also rising Undergraduates nationwide use loans to finance 49% of their college costs. The average college senior owes $19,237 at graduation. The median starting salary for a graduate with a bachelor’s degree is $50,900. Sources: Trends in Student Aid 2007 (The College Board); National Postsecondary Student Aid Study, Trends in Undergraduate Borrowing II, March 2008.
Help meet the challenge with a 529 plan
What is a 529 plan?
A way for families to save for college
An investment account with tax advantages
Qualified withdrawals are federally tax free
Operated by states and educational institutions
Ohio Tuition Trust Authority established in 1989
Benefits of a 529 plan
Can be used for any accredited college in the country
Anyone can contribute to your account
You have more control than with other types of college savings investments
You can change beneficiaries
You have other options if the beneficiary does not attend college
Tax benefits for every investor
Withdrawals used for qualified higher education expenses are free from federal income tax*
No taxes on earnings while your account accumulates
Lower estate-tax liability without sacrificing control of your assets
* Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply. Withdrawals for qualified higher education expenses subject to tax if HOPE Scholarship or Lifetime Learning Credit is claimed for same expenses. If withdrawing funds for qualified higher education expenses from both a 529 account and a Coverdell Education Savings Account, a portion of the earnings distribution may be subject to tax and penalty on amounts that exceed qualified higher education expenses. Please read the Offering Statement for details.
Grandparent uses Putnam CollegeAdvantage to lower estate tax
* Married couples filing jointly may contribute up to $130,000 per beneficiary. Individuals may contribute up to $65,000. Contributions are generally treated as gifts to the beneficiary for federal gift tax purposes and are subject to annual federal gift tax exclusion amount ($13,000 for 2009). Contributor may elect to treat contribution in excess of that amount (up to $65,000 for 2009) as pro-rated over 5 years. Election is made by filing a federal gift tax return. While contributions are generally excludable from contributor’s gross estate, if electing contributor dies during 5-year period, amounts allocable to years after death are includible in contributor’s gross estate. Consult your tax advisor for more information. Child A $65,000 Age 11 Child B $65,000 Age 5 Child C $65,000 Age 2 $0 Estate taxes due $3,500,000 Estate tax exemption for 2009 $3,500,000 Estate value after contribution Beneficiaries $195,000 Contribution to 529 plans* $3,695,000 Current estate value
A 529 has limited impact on financial-aid opportunities
Assets in a 529 account owned by parent are generally considered to be assets of the parent
Distributions for qualified expenses do not reduce financial aid
Make the most of your investment
Start early, contribute often This chart is for illustrative purposes only and is not intended to be representative of past or future performance. The Jones family saves $340 monthly for 18 years. The Smith family saves $1,219 monthly for 8 years. Assumes a hypothetical 8% annual return compounded monthly. The Jones family starts saving today, contributing $340 every month Total contribution $73,440 The Smith family waits 10 years to start saving, contributing $1,219 every month Total contribution $117,024 Earnings $89,714 Account value $163,154 after 18 years Earnings $46,130 Account value $163,154 after 8 years
Let the whole family contribute This chart is for illustrative purposes only and is not intended to be representative of past or future performance. The Jones grandfather makes a lump-sum contribution of $13,000 today. The Jones parents contribute $226 each month. Assumes a hypothetical 8% annual return compounded monthly. The Jones grandfather makes an initial contribution of $13,000 Total contribution $61,816 The Jones parents contribute $226 every month Earnings $101,338 Account value $163,154 after 18 years
Saving with Putnam CollegeAdvantage
The Putnam Investments difference
A time-honored tradition in money management
A prudent approach to investing
Funds for every investment goal
A commitment to doing what’s right for investors
Putnam CollegeAdvantage benefits and features
High account value limit of $331,000 *
No age or time restrictions
Choose from 20 investment options
As of January 2009. Subject to periodic review.
Age-based portfolios * Allocations shown are target allocations; actual allocations may vary. See offering statement for details. Asset allocation options reallocate annually, becoming more conservative as beneficiaries approach college age Conservative Moderate Aggressive Age of beneficiary 21+ 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Newborn Cash Fixed Income Equity
Goal-based options Balanced Allocations shown are target allocations; actual allocations may vary. See the offering statement for details. Asset allocation portfolios based on the investor’s objective Aggressive growth Growth Equity 60% Fixed Income 34% Cash 6% Equity 85% Fixed Income 15% Cash 0% Equity 100% Fixed Income 0% Cash 0%
Build your own portfolio Cash Fixed Income Equity * Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money investing in a money market fund. Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. ** Available on or about January 2009. † Putnam Stable Value Asset Class Option invests in Putnam Income Fund and Putnam Money Market Fund, and in insurance wrapper agreements issued by a bank or an insurance company. U.S. Small-Cap Equity Growth | Fidelity Advisor Small Cap Option Diversified Small-/Mid-Cap Equity | Fidelity Advisor Leveraged Company Stock Option U.S. Large-Cap Equity Growth | Maxim Janus Large Cap Growth Option ** International Small-Cap Equity Blend | Putnam International Capital Opportunities Option International Large-Cap Equity Blend | Putnam International Equity Option U.S. Mid-Cap Equity Growth | Maxim T. Rowe Price Mid Cap Growth Option ** U.S. Small-Cap Equity Value | Maxim Loomis Sayles Small Cap Value Option ** Diversified Large Cap Equity Blend | Davis New York Venture Option U.S. Large-Cap Equity Blend | Fidelity Spartan 500 Index Option U.S. Large-Cap Equity Value | Putnam Equity Income Option High-Yield Bond | Putnam High Yield Option Investment Grade Bond | Putnam Income Option Capital Preservation | Putnam Stable Value Option † Capital Preservation | Putnam Money Market Option *
Getting started is easy
How much can you contribute?
No minimum investment
As much as $65,000 in a single year ($130,000 for couples filing jointly) without exceeding the federal gift-tax exclusion *
Account value can be as high as $331,000 **
* A gift of $65,000 in 2009 would constitute five years’ worth of gifts. Additional gifts made for the same beneficiary in the same five-year period would be subject to federal gift taxes. Election is made by filing a federal gift tax return. If the electing contributor dies during the 5-year period, amounts allocable to year after death are inducible in the contributor’s gross estate. ** Contribution limit as of 1/1/09. Subject to periodic review.
Many ways to contribute
Invest a lump sum
Establish a dollar cost averaging program
Encourage contributions with gift certificates
Systematic investing and dollar cost averaging do not assure a profit or protect against loss in a declining market. You should consider your ability to continue investing during periods of low prices.
Withdrawals are easy
You tell us how to make out the check
Mail the completed form to Putnam Investments
* Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply.
Contact Melody Ferguson, Financial Advisor
The IRS has announced that it intends to repropose Section 529 regulations that will include certain changes and clarifications to existing proposed regulations. Although the exact content of the new proposed regulations, and the ultimate content of the final regulations, is not known at this time, the reproposed regulations could limit or require changes to, and affect tax consequences of, certain features of the Putnam CollegeAdvantage Program, including those described herein. CollegeAdvantage is offered and overseen by the Ohio Tuition Trust Authority. Ohio taxpayers may obtain state tax benefits through the plan. However, anyone may invest in the plan and use the proceeds to attend school in any state. Before investing, consider whether your state's plan or that of your beneficiary offers state tax and other benefits not available through CollegeAdvantage. If you withdraw money for something other than qualified higher education expenses, you will owe federal income tax and may face a 10% federal tax penalty on earnings. Consult your tax advisor. You should carefully consider the investment objectives, risks, charges, and expenses of the plan before investing. Ask your financial representative or call Putnam at 1-800-225-1581 for an offering statement containing this and other information for Putnam CollegeAdvantage, and read it carefully before investing. Putnam Retail Management, principal underwriter and distributor. Putnam Investment Management, investment manager.