Education Funding With 529 Savings Plans
Important Considerations <ul><ul><li>Neither UBS Financial Services Inc. nor any of its employees provide legal or tax adv...
Rising   Cost of a College Education <ul><ul><li>Average total charges at four-year public colleges and universities in 20...
Rising Cost of a College Education <ul><li>Investor Needs: </li></ul><ul><ul><li>College costs have risen significantly.  ...
The Rising Cost Of A College Education <ul><ul><li>Over the past decade, total charges for full-time, in-state residential...
There are two types of 529 Plans <ul><li>529 Pre-Paid Plans </li></ul><ul><li>A state 529 Pre-paid Tuition Plan generally ...
Why are 529 College Savings Plans Receiving So Much Attention? <ul><ul><li>Many people are concerned about the college edu...
The Facts About 529 College  Savings Plans
Why Choose a 529 Plan? * The $60,000/$120,000 contributions are, in effect, treated as five separate $12,000/$24,000 annua...
Why Choose a 529 Plan? One tax-free transfer or rollover of benefits from one 529 college savings Plan to another for the ...
Why Choose a 529 Plan? Most plans offer several investment options. Investment Options. <ul><ul><li>Account owner has cont...
Federal Tax Advantages of a 529 Plan <ul><li>Key tax advantages of a 529 Plan: </li></ul><ul><ul><li>Potential earnings gr...
State Tax Treatment <ul><ul><li>Although federal Tax treatment of 529 Plans is identical for every state,  state tax treat...
What Are Qualified Higher Education Expenses? <ul><li>The following items are considered to be qualified higher education ...
What Are Eligible Institutions? <ul><li>Eligible Institutions are defined as those who:  </li></ul><ul><ul><li>Admit stude...
Who Is Eligible to Establish a 529 Plan? <ul><li>Virtually any adult is eligible to establish a 529 Plan. </li></ul><ul><u...
Rights of the 529 Plan Account Owner <ul><li>Once you establish a 529 Plan account, generally you: </li></ul><ul><ul><li>C...
How Much Can You Contribute To A 529 Account? <ul><ul><li>Contributions minimums will depend on the terms of the state’s  ...
What types of Investment Options are available  in 529 Plans? <ul><ul><li>Investment options vary from Plan to Plan. </li>...
What types of Investment Options are available in 529 Plans? <ul><ul><li>Asset Allocation Portfolios </li></ul></ul><ul><u...
What If My Child Receives a Scholarship? <ul><li>If your child receives a scholarship, you can remove up to the amount of ...
What If the Beneficiary Does Not Attend College? <ul><li>If the 529 Plan account beneficiary does not attend college  you ...
Your Financial Advisor <ul><li>Your Financial Advisor will help you: </li></ul><ul><ul><li>Assess your need and goals. </l...
Disclosures <ul><li>The content is provided for informational purposes only and is not a detailed or complete discussion o...
Contact information <ul><li>Michael R. Becker Financial Advisor </li></ul><ul><li>UBS Financial Services Inc. 411 South St...
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College Funding Strategic Planning

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  • College Funding Strategic Planning

    1. 1. Education Funding With 529 Savings Plans
    2. 2. Important Considerations <ul><ul><li>Neither UBS Financial Services Inc. nor any of its employees provide legal or tax advice. </li></ul></ul><ul><ul><li>You should discuss the tax implications of 529 Plans with your legal and/or tax advisors, as features may vary significantly from state to state. </li></ul></ul><ul><ul><li>Tax advantages of 529 Plans may be affected due to the possibility that Congress can change tax laws at any time. </li></ul></ul><ul><ul><li>You should note that most states offer their own 529 Plans that may provide advantages and benefits exclusively for their residents and taxpayers. </li></ul></ul><ul><ul><li>You should read the appropriate 529 Plan Program Description carefully before investing, as it includes details about the Plans risks, fees, sales charges and tax treatment. </li></ul></ul>
    3. 3. Rising Cost of a College Education <ul><ul><li>Average total charges at four-year public colleges and universities in 2006-07 are $12,796 in current dollars or, 6.0% higher than they were in 2005-06. When adjusted for Inflation, the increase in cost is 2% </li></ul></ul><ul><ul><li>Average total charges at four-year private colleges and universities in 2006-07 are $30,367 in current dollars or, 6.0% higher than they were in 2005-06. When adjusted for Inflation, the increase in cost is 2% </li></ul></ul>Source: “The College Board Trends In College Pricing, 2006. Page 11, Table 4B”
    4. 4. Rising Cost of a College Education <ul><li>Investor Needs: </li></ul><ul><ul><li>College costs have risen significantly. </li></ul></ul><ul><ul><li>Families have a substantial need to save for their children’s college education. </li></ul></ul><ul><ul><li>Average total tuition and fees at two year public colleges in 2006-07 are $2,272, 4.1% higher than they were in 2005-06. and 23% higher over the last 5 yrs in constant dollars. </li></ul></ul><ul><ul><li>“ Average two year public college published tuition and fee increases fluctuate more than those in the four-year sectors and it is not uncommon for tuition and fees to decline or remain constant in inflation-adjusted dollars from one year to the next.” </li></ul></ul>Source: Pg 10, The College Board Executive Summary, Trends in College Pricing, 2006.
    5. 5. The Rising Cost Of A College Education <ul><ul><li>Over the past decade, total charges for full-time, in-state residential students at public four-year colleges have risen at an average rate of 6.3% per year or,3.3% per year after adjusting for inflation. </li></ul></ul><ul><ul><li>Over the same time period, total charges for full-time students at private four-year colleges have risen at an average rate of 5.6% per year or, 2.6% after adjusting for inflation </li></ul></ul>Source: “The College Board, Trends In College Pricing 2006”. Average College Costs include tuition, fees, room and board, students full cost of attendance includes books, supplies, transportation and other living expenses included in students budgets.
    6. 6. There are two types of 529 Plans <ul><li>529 Pre-Paid Plans </li></ul><ul><li>A state 529 Pre-paid Tuition Plan generally allows donors to fund future education expenses-tuition and, in some instances , room and board-at specific in-state, (typically public) colleges at current rates, which provides protection against rising higher education costs. Some plans provide additional benefits for state residents, and funding options range from one-time lump sum contributions to monthly installment payments. </li></ul><ul><li>529 College Savings Plans </li></ul><ul><li>529 College Savings Plans are state-sponsored, tax-advantaged investment programs that are funded with after-tax contributions that have the opportunity to grow tax-deferred. Distributions are received free from federal taxes if used for qualified higher education expenses such as tuition, room, board, books, transportation and supplies for college, graduate school and professional school. Otherwise, the distribution of earnings is subject to a federal tax penalty and treated as ordinary income for tax purposes. </li></ul>
    7. 7. Why are 529 College Savings Plans Receiving So Much Attention? <ul><ul><li>Many people are concerned about the college education of their children and or grandchildren and how they are going to pay for it. </li></ul></ul><ul><ul><li>529 College Savings Plans allow you to set aside substantial amounts of money today, on a tax-advantaged basis. </li></ul></ul><ul><ul><li>Virtually any adult can set up a 529 Plan. </li></ul></ul><ul><ul><li>Almost anyone can be a beneficiary of a 529 Plan account. </li></ul></ul><ul><ul><li>You can be your own beneficiary. </li></ul></ul><ul><ul><li>The owner maintains control of the account. </li></ul></ul><ul><ul><li>529 Plans help address investor needs. </li></ul></ul><ul><ul><li>Under the Pension Protection Act of 2006, Congress has made the federal tax exclusion for withdrawals made from 529 Plans permanent, if those withdrawals are used for qualified higher education expenses. (Note: Tax advantages of 529 Plans may be affected due to the possibility that Congress can change tax laws at any time). </li></ul></ul>
    8. 8. The Facts About 529 College Savings Plans
    9. 9. Why Choose a 529 Plan? * The $60,000/$120,000 contributions are, in effect, treated as five separate $12,000/$24,000 annual exclusion gifts (one for the current year and then one in each of the next four years). No Federal Gift tax will result as long as you make no other gifts to the beneficiary in the same five-year period. As always, tax advantages of 529 Plans may be affected due to the possibility that Congress can change tax laws at any time. Please consult your tax advisor regarding your personal situation. Almost any adult can establish a 529 Plan. Eligibility to Participate Aggregate contribution limits vary by state. Account owners may contribute up to $60,000 per beneficiary if filing single or up to $120,000 if filing jointly for estate planning considerations.* Contribution Limits. <ul><ul><li>Opportunity for tax-deferred treatment of earnings. </li></ul></ul>Tax Advantages. Benefits Features
    10. 10. Why Choose a 529 Plan? One tax-free transfer or rollover of benefits from one 529 college savings Plan to another for the same beneficiary may be allowed during a 12-month period. The rollover must be completed within 60 days of the withdrawal. Ability to Rollover to another Plan or change Designated Beneficiary. <ul><ul><li>Funds can be used for qualified higher education expenses at eligible educational institutions. </li></ul></ul>Flexibility. Benefits Features
    11. 11. Why Choose a 529 Plan? Most plans offer several investment options. Investment Options. <ul><ul><li>Account owner has control over beneficiary designations. The new beneficiary, however must be a close Member of the family. Otherwise, there may be adverse tax consequences. </li></ul></ul>Naming of Beneficiaries. Benefits Features
    12. 12. Federal Tax Advantages of a 529 Plan <ul><li>Key tax advantages of a 529 Plan: </li></ul><ul><ul><li>Potential earnings grow tax-deferred while in the Plan. </li></ul></ul><ul><ul><li>Distributions for qualified higher education expenses are free from federal income tax. </li></ul></ul><ul><ul><li>There are no federal tax deductions for making contributions to 529 Plans however, some states may offer a tax benefit. </li></ul></ul>
    13. 13. State Tax Treatment <ul><ul><li>Although federal Tax treatment of 529 Plans is identical for every state, state tax treatment varies. </li></ul></ul><ul><ul><li>State tax treatment may vary for in-state and out-of state residents. </li></ul></ul><ul><ul><li>Each states 529 Plan must be evaluated based on it merits and your needs, along with the tax effects on the contributor and the beneficiary. </li></ul></ul><ul><ul><li>Tax Advantages of 529 Plans may be affected due to the possibility that Congress can changes tax laws at any time. Individual state tax laws are also subject to change. </li></ul></ul>Since 529 College Savings Plans are state-sponsored, some may provide state income tax advantages for residents or taxpayers of that state. These benefits may include tax deductions for contributions to the plan and/or exemptions from state tax for qualified higher education distributions. Please consult with a tax advisor regarding the state tax implications of the specific Plan. Source: ”UBS 529 Plan brochure ”Invest in the future Using 529 Plans to Fund Higher Education” 2006. Tax advantages may be affected due to the possibility that Congress can change tax laws at any time.
    14. 14. What Are Qualified Higher Education Expenses? <ul><li>The following items are considered to be qualified higher education expenses : </li></ul><ul><ul><li>Tuition and fees at an eligible educational institution. </li></ul></ul><ul><ul><li>Graduate and Professional school tuition. </li></ul></ul><ul><ul><li>Certain trade and vocational school tuition. </li></ul></ul><ul><ul><li>Books and supplies. </li></ul></ul><ul><ul><li>Expenses for special needs services in the case of a special needs beneficiary. </li></ul></ul>Source: “Technical explanation of h.r. 4 The Pension Protection Act of 2006 As Passed by the House on July 28th, 2006 And As Considered By the Senate on August 3, 2006”.
    15. 15. What Are Eligible Institutions? <ul><li>Eligible Institutions are defined as those who: </li></ul><ul><ul><li>Admit students having a certificate of graduation from a school providing secondary education or the recognized equivalent. </li></ul></ul><ul><ul><li>Is legally authorized within such state to provide a program of education beyond secondary education. </li></ul></ul><ul><ul><li>Provides an educational program for which the institution awards a bachelor’s degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree. </li></ul></ul><ul><ul><li>Is a public or other nonprofit institution and is accredited by a nationally recognized accrediting agency or association. </li></ul></ul>Source: The Higher Education Act of 1965. part A. Amended, 1998.
    16. 16. Who Is Eligible to Establish a 529 Plan? <ul><li>Virtually any adult is eligible to establish a 529 Plan. </li></ul><ul><ul><li>The person establishing the account does not have to be related to the beneficiary. </li></ul></ul><ul><ul><li>You can establish a 529 Plan for yourself. </li></ul></ul><ul><ul><li>There are no income limitations. </li></ul></ul>Note, Both the person establishing a 529 Plan and the beneficiary must be U.S. citizens or legal resident and have a Social Security number or Taxpayer I.D. number.
    17. 17. Rights of the 529 Plan Account Owner <ul><li>Once you establish a 529 Plan account, generally you: </li></ul><ul><ul><li>Can name and change the beneficiary (subject to terms of the Plan). </li></ul></ul><ul><ul><li>Decide when money should be withdrawn and how it will be used. </li></ul></ul><ul><ul><li>Have complete control over the account. </li></ul></ul><ul><ul><li>You can withdraw funds from the account for yourself but, </li></ul></ul><ul><ul><li>Non-qualified withdrawals are subject to a 10 % federal tax penalty and earnings from which withdrawals are subject to ordinary income taxes. </li></ul></ul><ul><ul><li>Non-qualified withdrawals may also be subject to state taxes. </li></ul></ul><ul><ul><li>Speak to your tax advisor regarding the tax implications of 529 Plans. </li></ul></ul>
    18. 18. How Much Can You Contribute To A 529 Account? <ul><ul><li>Contributions minimums will depend on the terms of the state’s 529 Plan. </li></ul></ul><ul><ul><li>Every state has its own aggregate maximum contribution limit. </li></ul></ul><ul><ul><li>Under the gift tax rule, contributions of $60,000 can be made if filing single, or $120,000 if filing jointly. </li></ul></ul><ul><ul><ul><li>$60,000/$120,000 contribution is in effect, treated as five separate $12,000/$24,000 annual gifts. </li></ul></ul></ul><ul><ul><ul><ul><li>Contributions may be accelerated for 5 years without incurring a gift tax as long as there are no other gifts made to the same beneficiary during that time by the same account owner(s). </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Please consult your tax advisor for advice regarding the tax implications of the Plan. </li></ul></ul></ul></ul><ul><li>Tax advantages of 529 Plans may be affected due to the possibility that Congress can change tax laws at any time. </li></ul>
    19. 19. What types of Investment Options are available in 529 Plans? <ul><ul><li>Investment options vary from Plan to Plan. </li></ul></ul><ul><ul><li>Most Plans include a choice of several investment options that use a variety of mutual funds as underlying investments. Below are definitions for a few of them. </li></ul></ul><ul><ul><li>Aged Based Portfolios- </li></ul></ul><ul><ul><ul><li>These portfolios tailor the risk profile of the investments to the beneficiary’s investment time horizon. The portfolios begin by including more aggressive investments (higher potential risk with higher potential return), then gradually include more conservative (lower potential risk, lower potential return) as the beneficiary approaches college enrollment. </li></ul></ul></ul>
    20. 20. What types of Investment Options are available in 529 Plans? <ul><ul><li>Asset Allocation Portfolios </li></ul></ul><ul><ul><ul><li>Utilizes multiple types of underlying funds, that represent a wide range of investment strategies. Asset allocation portfolios typically do not change with the age of a child. However, they can be subject to review ,and portfolio changes can be made based on economic or other factors. </li></ul></ul></ul><ul><ul><li>Individual Portfolios </li></ul></ul><ul><ul><ul><li>These portfolios are made up of underlying individual mutual funds. The investor selects their own funds to create their own investment portfolio. </li></ul></ul></ul>
    21. 21. What If My Child Receives a Scholarship? <ul><li>If your child receives a scholarship, you can remove up to the amount of the scholarship from the 529 Plan without incurring the10% percent federal tax penalty. You may however be subject to ordinary income taxes on the amount withdrawn*. Please consult your tax advisor for advice regarding the tax treatment of 529 Plans. </li></ul><ul><li>Tax advantages of 529 Plans may be affected due to the possibility that Congress can change tax laws at any time. </li></ul>*Source: Pension Protection Act of 2006,Subsection(b)(3) to 7, pub107-16Sec402(a)(3)(A),,(4)(A),901
    22. 22. What If the Beneficiary Does Not Attend College? <ul><li>If the 529 Plan account beneficiary does not attend college you can: </li></ul><ul><ul><li>Leave the assets in the 529 Plan account. </li></ul></ul><ul><ul><li>Owner is allowed to change beneficiaries (subject to restrictions). </li></ul></ul><ul><ul><li>Withdraw the funds from the Plan. Non-qualified withdrawals will be subject to a 10% federal tax penalty and earnings from such withdrawals will be subject to ordinary income taxes. </li></ul></ul>
    23. 23. Your Financial Advisor <ul><li>Your Financial Advisor will help you: </li></ul><ul><ul><li>Assess your need and goals. </li></ul></ul><ul><ul><li>Identify appropriate education savings options. </li></ul></ul><ul><ul><li>Monitor your progress. </li></ul></ul>
    24. 24. Disclosures <ul><li>The content is provided for informational purposes only and is not a detailed or complete discussion of 529 plans. Neither UBS Financial Services Inc. nor any of its employees provide legal or tax advice. The tax implications of 529 plans should be discussed with your legal and/or tax advisors. The information in this presentation should not be relied upon as investment advice, and does not constitute a solicitation or recommendation to purchase or sell any specific security. </li></ul><ul><li>It is important that you understand the ways in which we conduct business and the applicable laws and regulations that govern us. As a firm providing wealth management services to clients in the U.S., we are registered with the U.S. Securities and Exchange Commission (SEC) as an investment advisor and a broker-dealer, offering both investment advisory programs and brokerage services. Though there are similarities among these services, the investment advisory programs and brokerage accounts we offer are separate and distinct, differ in material ways and are governed by different laws and separate contracts. </li></ul><ul><li>It is important that you carefully read the agreements and disclosures that we provide to you about the products or services we offer. While we strive to ensure the nature of our services is clear in the materials we publish, if at any time, you seek clarification on the nature of your accounts or the series you receive, please speak with your Financial Advisor or call 201.352.9999. For more information please visit our website at www.ubs.com/workingwithus. </li></ul>
    25. 25. Contact information <ul><li>Michael R. Becker Financial Advisor </li></ul><ul><li>UBS Financial Services Inc. 411 South State Street P.O. Box 1457 Newtown, PA 18940 </li></ul><ul><li>215-579-6004 800-279-9486 215-579-7139 Fax www.ubs.com/fa/michael-zabecker </li></ul><ul><li>CollegeAmerica 529 Plan </li></ul><ul><li>American Funds / VA College Savings Plan </li></ul><ul><li>CollegeBound fund 529 Plan </li></ul><ul><li>Alliance Bernstein / RI Higher Education Assistance Authority </li></ul><ul><li>John Hancock Freedom 529 Plan </li></ul><ul><li>Multi-Manager / Education Trust of AK </li></ul>Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object [Name] Tel: [+XX-XXX-XXX XXXX] [email@XXXX] A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A ABC corp. A A UBS Financial Services Inc. www.ubs.com/financialservicesinc © 2007 UBS Financial Services Inc. All Rights Reserved. Member SIPC. UBS Financial Services Inc. is a subsidiary of UBS AG. Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object

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