DC College Savings Plan Helping Children Reach a Higher Potential

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1 529 DC College Savings Plan Helping Children Reach a Higher Potential For Dealer and Financial Advisor Use Only. Not to be Distributed to the General Public.

2 OVERVIEW The DC College Savings Plan is a Section 529 plan created to help families prepare for the substantial cost of higher education. Sponsored by the Government of the District of Columbia and managed by Calvert Investments, the Plan offers special tax advantages that enable your clients to maximize their savings potential. Featuring affordable program fees and competitive investment options managed by Calvert and other premier institutional money managers, this 529 Plan is among the fastest growing in the country. There are several key elements that set the DC College Savings Plan apart from others. CHOICE The DC College Savings Plan features a wide range of investment options managed by Calvert Investments and other premier institutional money managers. For clients who are interested in socially responsible investing, this is the only plan in the country offered nationally through financial advisors which features a full range of sustainable and responsible investments. COMMITMENT With the rising cost of higher education, education funding is likely becoming an increasingly common challenge among your clients. At Calvert, we stand ready to support you every step of the way, with experienced wholesalers and dedicated marketing support including sales ideas, program collateral, and presentation systems. FLEXIBILITY With the DC College Savings Plan, you and your clients can create a customized asset allocation strategy by using the Plan s individual investment options. Or, you can achieve diversification in one simple step with our professionally managed, age-based allocation strategies. Sponsored by Government of the District of Columbia Office of the Mayor Office of the Chief Financial Officer Office of Finance and Treasury 2012 Government of the District of Columbia For Dealer and Financial Advisor Use Only. Not to be Distributed to the General Public.

3 THE DC COLLEGE SAVINGS PLAN ADVANTAGE There are many 529 plans available, but the DC College Savings Plan is the only 529 plan in the country which offers your clients the choice of single fund strategies or agebased portfolios which include a full range of socially responsible investment options. TAX BENEFITS By choosing the DC College Savings Plan, your clients will pay no federal income taxes on earnings from money invested in the Plan or on withdrawals used to pay for qualified higher education expenses. Your clients should consult their tax advisors to determine whether earnings would be exempt from state income tax. CONTROL OVER THE ASSETS Unlike traditional custodial accounts such as a Uniform Gift to Minors Account (UGMA), the DC College Savings Plan allows your clients to maintain complete control over account assets including withdrawals, even when the beneficiary reaches majority age. If the designated beneficiary chooses not to pursue a college education, your client can designate a new beneficiary who is a member of the beneficiary s family (as defined by the IRS) without federal income tax consequences. Some beneficiary changes may result in a taxable event. Please check with your tax advisor. ANYONE CAN CONTRIBUTE Parents, grandparents, friends, relatives, even a beneficiary,* can contribute on behalf of the beneficiary to a DC College Savings Plan account established by your client. Contributions from any one donor can be as low as $25 per month. Once the total account balances for the D.C. accounts held for a beneficiary (regardless of owner) reach a value of $260,000, no further contributions may be made. INVESTMENT CHOICE AND FLEXIBILITY The DC College Savings Plan offers an array of equity, bond, and stability-of-principal investment strategies, both actively and passively managed, so you can help your clients construct the best customized portfolio for their needs. Or, you can achieve diversification in one simple step with our age-based allocation portfolios. The five age-based portfolio strategies feature professionally managed asset allocations with systematic rebalancing. Simply select the age-based portfolio that matches the account beneficiary s age. As the beneficiary grows older, we will automatically move the account assets to the next appropriate age-based portfolio for you. For the client who is interested in socially responsible (sustainable) funds, this is the only plan in the country to feature a full range of investment options featuring Calvert s unique investment research process with two integral components: a rigorous review of financial performance plus a thorough assessment of environmental, social, and governance performance. Only when a company meets all of Calvert s standards for both will we invest. PROCEEDS CAN BE USED AT ANY COLLEGE Unlike prepaid tuition programs, withdrawals from a DC College Savings Plan account can be used at any accredited college, including vocational and technical school, university, or graduate school in the United States and some foreign countries to pay for tuition, fees, room and board, books, and other qualified expenses. GIFT AND ESTATE TAX BENEFITS The DC College Savings Plan offers your clients a special gift tax exemption. A participant may contribute up to $70,000 in a single year ($140,000 for married couples who file jointly), in effect accelerating annual gift amounts of $14,000 over five years, without exceeding the federal gift tax exclusion. If the donor dies during the five-year period, a pro-rata portion of the gift will be included in the donor s gross estate based on the number of years remaining in the five-year period, not including the year in which the donor died. TAKE THE NEXT STEP Education funding may be one of many important financial challenges facing your clients. Calvert offers you the support to assist with your clients broader financial plans, with a dedicated wholesale team and marketing support. For more information, contact your Calvert regional sales manager or visit Although residents of any state can invest in the DC College Savings Plan, keep in mind that your client s home state may offer a 529 plan with additional tax benefits or other advantages. If the DC College Savings Plan is appropriate, simply review the program disclosure booklet with your client and complete the DC College Savings Plan enrollment forms, which include information on how to make initial and ongoing contributions. * Must possess a valid social security number. For Dealer and Financial Advisor Use Only. Not to be Distributed to the General Public.

4 Saving for College: COMPARE THE OPTIONS DC College Savings Plan Coverdell Education Savings Account Custodial Account (UGMA/UTMA) Parents Investment Account Income limitations No, and contributor s income may further reduce allowable contribution amount. No No Limitations on contributions No annual limit. Amounts greater than $70,000 per fiveyear period may be subject to federal gift tax. Contributions cannot be made once total account balances in DC s 529 Plan for the beneficiary reach $260,000. $2,000 annually in total contributions to any one beneficiary. Contributions cannot be made after beneficiary reaches age 18. No annual limit. Amounts greater than $14,000 per year may be subject to federal gift tax. No annual limit. Amounts greater than $14,000 per year may be subject to federal gift tax. Taxation on earnings Free of federal income tax and, in most cases, state income tax. Free from federal income tax and, in many cases, state income tax. For children under 19 (or full-time college students under the age of 24 who did not earn at least half the cost of their own support) the first $1000 of taxable investment earnings from all sources is tax free. Such earnings between $1000 and $2,000 are taxed at the child s rate. Earnings above $2,000 are taxed at the parents rate. Dividends and interest are taxed at account owner s income tax rate. Capital gains are taxed at applicable rates. Qualified use of withdrawals Most expenses at any postsecondary institution accredited by the U.S. Department of Education. Most expenses at any school that provides elementary or secondary education as determined by state law or any postsecondary institution accredited by the U.S. Department of Education. Unlimited, but must be for beneficiary s benefit. Unlimited Taxation on withdrawals used for qualified expenses Free of federal income tax and, in most cases, state income tax. Free of federal income tax and, in many cases, state income tax, if made before beneficiary reaches age 30. Taxation on non-qualified withdrawals Federal income tax and 10% penalty on earnings. Federal income tax and 10% penalty on earnings. Control over assets Account owner maintains control, decides on withdrawals, and can change the beneficiary, or receive refund. Account owner maintains control, decides on withdrawals, and can change the beneficiary until the beneficiary reaches age 30. Funds may not be refunded. Beneficiary assumes control at certain age (18 to 21 depending on state and account type). Funds may not be refunded. Account owner maintains control and decides on withdrawals. Ownership of assets for financial aid consideration Account owner Account owner Beneficiary/student Account owner Ability to change beneficiaries, if within same family, if within same family and to persons under 30 years of age. No Not applicable Contribution deductibility from D.C. income tax For District of Columbia taxpayers, $4,000 maximum annually.* No No No Estate planning features Assets are transferred out of the donor s estate. (Exceptions for front-loaded 5-year contributions if the donor dies.) Assets are transferred out of the donor s estate. Depends upon whether donor is the account custodian. Assets remain in the parent s estate. * Account owners who are District of Columbia taxpayers may deduct up to $4,000 in plan contributions from their Federal adjusted gross income each year on their D.C. income tax return (up to $8,000 for married couples filing jointly, if each taxpayer owns an account). If a D.C. taxpayer s contribution amount exceeds $4,000 in a calendar year, he or she may carry forward the excess amount for deductions for up to five years. This comparison chart does not address all of the details of each of the options presented. Therefore, individual investors should consult their own tax advisors. For Dealer and Financial Advisor Use Only. Not to be Distributed to the General Public.

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6 Pursuant to U.S. Treasury regulations, we must inform you that any tax advice contained in these materials is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code. In addition, any U.S. federal tax advice contained in these materials was written to support the promotion and marketing of the D.C. College Savings Plan. Each taxpayer should seek tax advice based on the taxpayer s particular circumstance from a qualified and independent tax advisor. Calvert Investments is committed to partnering with advisors to help their clients reach their financial goals. We provide a variety of tools and services to support advisors. For more information regarding the DC College Savings Plan or to obtain materials, please contact our dedicated 529 Plan team at An investor should consider, before investing, whether the investor s or designated beneficiary s home state offers any state tax or other benefits that are only available to residents of that state. An investment in another state s 529 college savings plan may not offer comparable benefits. This booklet does not provide all material information concerning the DC College Savings Plan. Accounts representing interests in the DC College Savings Plan are offered only through a Participation Agreement and a Disclosure Booklet that describes the DC College Savings Plan. For more information or additional copies, contact Calvert. The DC College Savings Plan Program Disclosure Booklet should be read carefully before opening an Account. The District of Columbia, its agencies, Calvert, and its affiliates do not insure any account or guarantee its principal or investment return. Account value will fluctuate based upon a number of factors, including general financial market conditions. For more information on the DC College Savings Plan, please call An investor should consider the investment objectives, risks, charges, and expenses of an investment carefully before investing. The District of Columbia College Savings Trust Program Disclosure Booklet contains this and other information. Read it carefully before you invest or send money. The Government of the District of Columbia does not guarantee investments in the program. Investment involves risk, including possible loss of principal. The DC College Savings Plan is underwritten and distributed by Calvert Investment Distributors, Inc., member FINRA/SIPC and subsidiary of Calvert Investments, Inc Montgomery Avenue Bethesda, Maryland May Lose Value. Not FDIC Insured. Not a Deposit. No Bank Guarantee. Not NCUA/NCUSIF Insured. No Credit Union Guarantee. BR M