Even brilliance needs a thoughtful plan. Inherit the thinking of J.P. Morgan. New York s 529 Advisor-Guided College Savings Program

Transcription

1 Inherit the thinking of J.P. Morgan Even brilliance needs a thoughtful plan New York s 529 Advisor-Guided College Savings Program INVESTMENTS ARE NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

2 No matter how smart the student or savvy the investor, achieving college goals requires a thoughtful plan. 0 WHAT S INSIDE Create your college plan page Discover why planning is so critical today and how a tax-advantaged 529 account may help Advisor-Guided Plan investment options Three different ways to pursue your college goals Compare your college savings options A 529 plan offers benefits not typically found in other types of education accounts Frequently asked questions Learn more about the Advisor-Guided Plan NEW YORK S 529 ADVISOR-GUIDED COLLEGE SAVINGS PROGRAM page 6 page page 2

3 College planning: Now more important than ever before INHERIT THE THINKING OF J.P. MORGAN College education has become a necessity for any family wishing to help children maximize their talents and realize their full potential. The Advisor-Guided Plan is managed by Ascensus Broker Dealer Services, Inc., with investment management provided by J.P. Morgan. As an investor, you receive more than investments from a knowledgeable manager. You also gain insights that can only come from more than a century of helping clients like you achieve their goals. From website resources to investor services, our experienced professionals share their best ideas on making informed, intelligent decisions with your college dollars. Question: How to pay for it? No matter what your financial situation, the question is no longer if your loved ones will attend college. It s how to plan for those rapidly rising tuition bills without sacrificing other important goals, such as planning for retirement or paying down your mortgage. Recent market volatility and economic uncertainty raise even more questions. How should you invest in this economy? Can you count on financial aid? Will student loans overburden your college graduates with debt? Possible solution: A tax-advantaged 529 college savings plan Named after Section 529 of the IRS tax code, these plans offer tax-deferred growth with tax-free withdrawals. Investment earnings aren t taxed while in your account, and withdrawals are tax free when used to pay qualified expenses for any college-bound beneficiary. With their estate planning benefits, 529 plans also make ideal gifts from grandparents and other family members. Earnings on non-qualified withdrawals may be subject to federal income tax and a 0% federal penalty tax, as well as state and local income taxes. START SAVING FOR COLLEGE TODAY WITH THE ONLY 529 PLAN OFFERING A FULL SUITE OF J.P. MORGAN S INSIGHTS AND INVESTMENTS. J.P. MORGAN ASSET MANAGEMENT

4 Income tax advantages: Pay less in taxes, keep more for college PLANNING TIP Keep every dollar your investments earn. Taxes won t erode your investment gains in a 529 plan. Consider this: With a taxable account, an 8% return could be reduced to as little as 5.2% after federal taxes possibly the difference between achieving college goals and coming up short. Unlike traditional taxable accounts, the 529 Advisor-Guided Plan offers tax breaks that can put more money to work for college. The power of tax-free compounding With the Advisor-Guided Plan, investment earnings compound on a tax-deferred basis, and qualified withdrawals are entirely free from federal and state income taxes. Because your account isn t taxed, it has the potential to grow faster than taxable investments earning the exact same returns. Additional tax savings for New York taxpayers Account owners who are New York taxpayers can deduct up to $5,000 in contributions from their state income taxes each year ($0,000 if married filing jointly). 2 In some states, contributions to any 529 plan are eligible for the state s income tax deduction, and residents are not required to choose the in-state plan to get the benefit. Your financial advisor or tax advisor can provide additional details. Earnings on non-qualified withdrawals may be subject to federal income tax and a 0% federal penalty tax, as well as state and local income taxes. 2 Deductions may be subject to recapture in certain circumstances, such as rollovers to another state s plan or non-qualified withdrawals. TURNING REGULAR INVESTMENTS INTO $9,000 FOR COLLEGE Investment growth over 8 years $20,000 $90,000 $60,000 $30,000 $03,666 $9,43 $5,477 More with tax-free 529 plan 0 Taxable account Tax-free 529 plan Source: J.P. Morgan Asset Management. Illustration assumes an initial $,000 investment and monthly investments of $300 for 8 years. Chart also assumes an annual investment return of 6% and federal tax rate of 28%. Investment losses could affect the relative tax-deferred investing advantage. This hypothetical illustration is not indicative of any specific investment and does not reflect the impact of fees or expenses. Each investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the illustration may not reflect these factors. These figures do not reflect any management fees or expenses that would be paid by a 529 plan participant. Such costs would lower performance. The chart is shown for illustrative purposes only. Past performance is no guarantee of future results. 2 NEW YORK S 529 ADVISOR-GUIDED COLLEGE SAVINGS PROGRAM

5 Estate and gift tax advantages: Reduce your taxable estate, increase your legacy For families with estate planning needs, the Advisor-Guided Plan offers the added potential to reduce estate taxes while giving children a gift that lasts a lifetime. Reduce your taxable estate without giving up control of assets Contributions to 529 plans are considered completed gifts, which means current assets and future earnings are excluded from your taxable estate even though you retain control for the life of the account. You can name and change account beneficiaries. You choose investments. You alone control withdrawals. If circumstances change, you can even return assets to your estate, subject to taxes and penalties. Give five years worth of tax-free gifts in a single year Federal gift taxes generally apply to any gifts exceeding $4,000 per beneficiary each year ($28,000 for married couples). With the Advisor-Guided Plan, you can gift five times that amount in a single year free from gift taxes. Gifting up to $70,000 per beneficiary ($40,000 for married couples) may benefit investors looking to: Remove substantial assets from an estate Put large contributions to work immediately for college Make up for lost time as older beneficiaries approach college age AN IDEAL GIFT FROM GRANDPARENTS Instead of leaving inheritances to grandchildren, consider opening a 529 account to transfer wealth during your lifetime and create a lasting legacy for future generations. You may maximize the tax savings for your estate, with minimal impact on a student s financial aid. No additional gifts can be made to the same beneficiary over a five-year period. If the donor does not survive the five years, a portion of the gift is returned to the taxable estate. CASE STUDY ACCELERATED GIFTS TO FIVE GRANDCHILDREN Fred and Diane Smith want to reduce estate taxes while helping their five grandchildren earn a college diploma. By contributing $40,000 to each child s 529 account today, the Smiths eventually remove over $.4 million from their taxable estate the initial gifts, plus all future investment gains. Source: J.P. Morgan Asset Management. Illustration assumes an annual investment return of 6%. This example does not represent the performance of any particular investment. Different assumptions will result in outcomes different from this example. Your results may be more or less than the figures shown. Investment losses could affect the relative tax-deferred investing advantage. Each investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the illustration may not reflect these factors. These figures do not reflect any management fees or expenses that would be paid by a 529 plan participant. Such costs would lower performance. $,500,000 $,200,000 $900,000 $600,000 $300,000 0 INVEST FOR COLLEGE AND REDUCE ESTATE TAXES Initial gift of $40,000 Value at age 8 $77,868 4-year-old $225,980 $254,76 Over $.4 million removed from estate $343,573 $4,47 0-year-old 8-year-old 3-year-old Newborn Total Grandchildren s 529 plan accounts $700,000 $,43,284 This chart is shown for illustrative purposes only. Past performance is no guarantee of future results. J.P. MORGAN ASSET MANAGEMENT 3

6 Beyond tax benefits: A flexible plan with extensive choice and control Pay qualified expenses at a broad choice of schools PLANNING TIP Don t rely entirely on financial aid and scholarships. Many families earn too much to qualify for need-based aid, and even the brightest students rarely receive full scholarships. With a 529 plan, you control a child s education, not the financial aid office. And if you apply for federal aid, 529 plan assets owned by the parent typically have less influence on eligibility than accounts held in a dependent student s name. Visit to learn more about how financial aid is calculated. Your account may be used at any accredited public or private institution in the United States and overseas community colleges, four-year universities, graduate schools and vocational-technical schools. Account assets can go toward tuition, fees, certain room and board expenses, books and other qualified higher education expenses. Take advantage of low minimums and high contribution maximums Open an account with as little as $,000 per account (or $25 when setting up an automatic investment plan). You and others can continue adding assets until the account balance for a beneficiary reaches $375,000. Maximize your flexibility and accessibility The Advisor-Guided Plan is generally available to everyone, with no income or state residency requirements. As account owner, you can name any beneficiary of any age, living in any state. It could be a child, grandchild, niece, nephew, friend even yourself, a spouse or another adult. You also have the flexibility to: Change beneficiaries or transfer a portion of your account to another member of the beneficiary s family 2 Leave accounts open for an unlimited time for students who attend college later than planned Take full control of your account Account owners control how their account assets are invested and spent, even after a beneficiary reaches the age of majority. This helps to ensure that money earmarked for college is actually used for college. Account owner must have a Social Security number or Tax ID. 2 Section 529 defines a family member as a son, daughter, stepson or stepdaughter or a descendant of any such person; a brother, sister, stepbrother or stepsister; a father or mother or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the father or mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; the spouse of the beneficiary or the spouse of any individual described above; or a first cousin of the beneficiary. Gift or generation-skipping transfer taxes may apply. Please consult your tax advisor for more information. 4 NEW YORK S 529 ADVISOR-GUIDED COLLEGE SAVINGS PROGRAM

7 Choose from a wide range of investments Select any of our broadly diversified, professionally managed portfolios and change investments without tax consequences once per calendar year or whenever you change beneficiaries. The Plan s investment options are managed by J.P. Morgan Asset Management and State Street Global Advisors Funds Management, both highly respected financial institutions. Invite other contributors with Ugift Ugift is an online tool that makes it easy for others to give the gift of a college education. Simply invite family members and friends to celebrate holidays, birthdays, graduations and other special occasions with a gift contribution to your Advisor-Guided Plan account. Lessen the impact on financial aid Under the current federal formula for determining financial aid eligibility, a 529 savings plan owned by a parent is considered a parental asset and is assessed at a lower rate than a student asset. As a result, it may have less impact on eligibility than other investment vehicles. CASE STUDY INVESTING VS. BORROWING College typically costs far less when you have saved for it instead of borrowing. The Lees opened a 529 college savings account when their son was born 8 years ago. With an initial investment of $,000 and monthly investments of $300 thereafter for 8 years, the account grew to over $9,000. A student loan for a similar amount would have cost them over $67,000, which means opening a 529 account when their son was born saved them over $0,000 in out-ofpocket expenses. IT COSTS LESS TO INVEST NOW THAN BORROW LATER IT COSTS LESS TO INVEST NOW THAN BORROW LATER $200,000 Investment growth Out-of-pocket cost $50,000 $00,000 $50,000 0 $9,43 $65,800 College savings plan (Over 8 years) $67,553 College loan (Principal and interest) $0,753 Out-of-pocket savings Source: J.P. Morgan Asset Management. The investing illustration assumes an initial lump-sum investment of $,000, subsequent monthly investments of $300 thereafter for 8 years and assumes an annual investment return of 6% and federal tax rate of 28%. Investment losses could affect the relative tax-deferred investing advantage. The borrowing illustration assumes an interest rate of 7.2% and a payback period of 0 years. This hypothetical illustration is not indicative of any specific investment and does not reflect the impact of fees or expenses. Such costs would lower performance. Each investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the illustration may not reflect these factors. The chart is shown for illustrative purposes only. Past performance is no guarantee of future results. J.P. MORGAN ASSET MANAGEMENT 5

8 Broad investment choices: Three different ways to pursue your college goals Whether you want to grow assets for college or preserve what you ve already earned, you ll find investment options to meet your unique goals, time frame and risk tolerance. Choose from three distinct approaches to gain access to select J.P. Morgan strategies as well as exchange traded funds from State Street Global Advisors. 2 3 AGE-BASED PORTFOLIOS ASSET ALLOCATION PORTFOLIOS INDIVIDUAL PORTFOLIOS Select this option and let J.P. Morgan handle the rest Choose your portfolio(s) Switch portfolios as your needs change over time Choose your portfolio(s) Decide how much to allocate to each Adjust your portfolio mix as appropriate 6 NEW YORK S 529 ADVISOR-GUIDED COLLEGE SAVINGS PROGRAM

9 WORK WITH YOUR ADVISOR TO DECIDE HOW YOU WANT TO INVEST. Age-based portfolios This approach simplifies investing to one easy decision. Your contribution starts in a globally diversified portfolio appropriate for the account beneficiary s age and then automatically becomes more conservative as college gets closer. The goal is to maximize return potential in early years and reduce risks as college approaches by preserving capital and generating income for college expenses. PROGRESSION OF THE AGE-BASED PORTFOLIOS PROGRESSION OF THE AGE-BASED PORTFOLIOS 529 Aggressive Age-Based 529 Portfolio Aggressive Age-Based [Age 0-5] Portfolio [Age 0-5] 529 Moderate Growth Age-Based 529 Moderate Portfolio Growth Age-Based [Age 6-9] Portfolio [Age 6-9] 529 Moderate Age-Based 529 Portfolio Moderate Age-Based [Age 0-2] Portfolio [Age 0-2] 529 Conservative Growth Age-Based 529 Conservative Portfolio Growth [Age Age-Based 3-4] Portfolio [Age 3-4] 529 Conservative Age-Based 529 Conservative Portfolio Age-Based [Age 5-7] Portfolio [Age 5-7] 529 College Age-Based 529 Portfolio College [Age Age-Based 8 and Portfolio over] [Age 8 and over] U.S. Large/Multi-Cap Equity 48.50% 43.00% 34.50% 24.25% 6.75% 8.00% U.S. Large/Multi-Cap Equity 48.50% 43.00% 34.50% 24.25% 6.75% 8.00% U.S. Mid/Small Cap Equity 8.50% 6.00% 4.25% 3.25%.50% U.S. Mid/Small Cap Equity 8.50% 6.00% 4.25% 3.25%.50% REITs 7.00% 6.50% 5.00% 3.50% 2.50%.00% REITs 7.00% 6.50% 5.00% 3.50% 2.50%.00% International Equity 2.00% 9.00% 5.00% 7.00% 3.00% International Equity 2.00% 9.00% 5.00% 7.00% 3.00% Emerging Markets Equity 9.00% 5.00% 3.50%.50% Emerging Markets Equity 9.00% 5.00% 3.50%.50% Core Fixed Income 2.00% 24.00% 37.00% 37.00% 26.00% Core Fixed Income 2.00% 24.00% 37.00% 37.00% 26.00% High Yield/Floating Rate 2.00% 3.00% 5.00% 9.50% 8.00% High Yield/Floating Rate 2.00% 3.00% 5.00% 9.50% 8.00% Emerging Markets Debt.00% 2.00% 3.00% 4.00% 4.50% 3.50% Emerging Markets Debt.00% 2.00% 3.00% 4.00% 4.50% 3.50% Inflation Protection 4.50% 6.00% Inflation Protection Money Market 4.50% 6.00% 4 Money Market 4 UNDERLYING INVESTMENTS UNDERLYING INVESTMENTS U.S. Large/Multi-Cap Equity U.S. Large/Multi-Cap Equity Growth Advantage Fund Growth U.S. Equity Advantage Fund Fund U.S. Value Equity Advantage Fund Fund SPDR S&P Value 500 ETF Advantage Fund SPDR S&P 500 ETF U.S. Mid/Small Cap Equity U.S. Mid/Small Mid Cap Equity Cap Equity Fund Mid Small Cap Cap Equity Growth Fund Fund Small Cap Growth Value Fund Fund Small Cap Value Fund REITs REITs Realty Income Fund SPDR Dow Realty Jones International Income Fund Real Estate ETF SPDR Dow Jones International Real Estate ETF International Equity International International Equity Equity Fund International Equity Opportunities Fund Fund SPDR S&P World International ex-u.s. ETF Opportunities Fund SPDR S&P World ex-u.s. ETF Emerging Markets Equity Emerging Markets Equity Emerging Economies Fund Emerging Economies Markets Equity Fund Fund Emerging Markets Equity Fund Core Fixed Income Core Fixed Core Income Bond Fund Core Corporate Bond Bond Fund Fund SPDR Barclays Corporate Capital Bond Aggregate FundBond ETF SPDR Barclays Capital Aggregate Bond ETF High Yield/Floating Rate High Yield/Floating Floating Rate Income Rate Fund Floating High Yield Rate Fund Income Fund High Yield Fund Emerging Markets Debt Emerging Markets Debt Emerging Markets Debt Fund Emerging Markets Local Debt Fund Currency Debt FundEmerging Markets Local Currency Debt Fund Inflation Protection Inflation Inflation Protection Managed Bond Fund SPDR Barclays Inflation Capital Managed TIPS ETFBond Fund SPDR Barclays Capital TIPS ETF Money Market Money Market Prime Money Market Fund* Prime Money Market Fund* * The portfolio s investment in the Prime Money Market Fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although the Prime Money Market Fund seeks to preserve the value of your investment at $.00 per share, it is possible that the portfolio may lose money by investing in the Fund. The asset allocation shown in the above chart represents strategic allocations and may be modified over the short to intermediate term. Asset allocation doesn t guarantee investment returns and does not eliminate the risk of loss. J.P. MORGAN ASSET MANAGEMENT 7

10 Asset allocation portfolios Like the age-based portfolios, these portfolios are broadly diversified across asset classes and portfolio managers. The difference is that the asset mix in an asset allocation portfolio stays the same unless you and your advisor decide to switch to a different investment pursuing a different objective. ASSET ALLOCATION PORTFOLIO OPTIONS ASSET ALLOCATION PORTFOLIO OPTIONS 529 Aggressive Portfolio 529 Aggressive Portfolio 529 Moderate Growth 529 Portfolio Moderate Growth Portfolio 529 Moderate Portfolio 529 Moderate Portfolio 529 Conservative Growth 529 Portfolio Conservative Growth Portfolio 48.50% 48.50% 8.50% 8.50% 7.00% 7.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%.00%.00% 43.00% 43.00% 6.50% 6.50% 9.00% 9.00% 9.00% 9.00% 3.00% 3.00% 2.00% 2.00% 34.50% 34.50% 6.00% 6.00% 5.00% 5.00% 5.00% 5.00% 24.00% 24.00% 5.00% 5.00% 3.00% 3.00% 24.25% 24.25% 4.25% 4.25% 3.50% 3.50% 5.00% 5.00% 37.00% 37.00% 4.00% 4.00% 4.50% 4.50% 529 Conservative Portfolio 529 Conservative Portfolio 529 College Portfolio 529 College Portfolio 529 All Fixed Income 529 Portfolio All Fixed Income Portfolio 6.75% 6.75% 3.25% 3.25% 2.50% 2.50% 7.00% 7.00% 3.50% 3.50% 37.00% 37.00% 9.50% 9.50% 4.50% 4.50% 6.00% 6.00% 8.00% 8.00%.50%.50%.00%.00% 3.00% 3.00%.50%.50% 26.00% 26.00% 8.00% 8.00% 3.50% 3.50% % 69.00% 4.00% 4.00% 6.00% 6.00%.00%.00% UNDERLYING INVESTMENTS UNDERLYING INVESTMENTS U.S. Large/Multi-Cap Equity U.S. Large/Multi-Cap Equity Growth Advantage Fund Growth Advantage Fund U.S. Equity Fund U.S. Equity Fund Value Advantage Fund Value Advantage Fund SPDR S&P 500 ETF SPDR S&P 500 ETF U.S. Mid/Small Cap Equity U.S. Mid/Small Cap Equity Mid Cap Equity Fund Mid Cap Equity Fund Small Cap Growth Fund Small Cap Growth Fund Small Cap Value Fund Small Cap Value Fund REITs REITs Realty Income Fund Realty Income Fund SPDR Dow Jones International Real Estate ETF SPDR Dow Jones International Real Estate ETF International Equity International Equity International Equity Fund International Equity Fund International Opportunities Fund International Opportunities Fund SPDR S&P World ex-u.s. ETF SPDR S&P World ex-u.s. ETF Emerging Markets Equity Emerging Markets Equity Emerging Economies Fund Emerging Economies Fund Emerging Markets Equity Fund Emerging Markets Equity Fund Core Fixed Income Core Fixed Income Core Bond Fund Core Bond Fund Corporate Bond Fund Corporate Bond Fund SPDR Barclays Capital Aggregate Bond ETF SPDR Barclays Capital Aggregate Bond ETF High Yield/Floating Rate High Yield/Floating Rate Floating Rate Income Fund Floating Rate Income Fund High Yield Fund High Yield Fund Emerging Markets Debt Emerging Markets Debt Emerging Markets Debt Fund Emerging Markets Debt Fund Emerging Markets Local Currency Debt Fund Emerging Markets Local Currency Debt Fund Inflation Protection Inflation Protection Inflation Managed Bond Fund Inflation Managed Bond Fund SPDR Barclays Capital TIPS ETF SPDR Barclays Capital TIPS ETF Money Market Money Market Prime Money Market Fund* Prime Money Market Fund* The asset allocation shown in the above chart represents strategic allocations and may be modified over the short to intermediate term. Asset allocation doesn t guarantee investment returns and does not eliminate the risk of loss. 8 NEW YORK S 529 ADVISOR-GUIDED COLLEGE SAVINGS PROGRAM

11 INDIVIDUAL PORTFOLIOS Individual portfolios For maximum flexibility customization in meeting potential, your you individual and your needs, financial you and advisor your can financial choose advisor individual can also portfolios, choose each from investing these in individual a single underlying portfolios. asset Select class. one Select portfolio one to portfolio gain exposure to round to a out specific your existing asset class holdings or combine or combine multiple several options to create to create and your control own an personalized asset mix customized mix of investments. to your exact needs. ASSET CLASS INDIVIDUAL PORTFOLIO U.S. stocks 529 Equity Income Portfolio 529 Growth Advantage Portfolio 529 Large Cap Growth Portfolio SSgA 529 Russell 3000 ETF Portfolio 529 Mid Cap Value Portfolio 529 Small Cap Growth Portfolio 529 Small Cap Value Portfolio SSgA 529 S&P 600 Small Cap ETF Portfolio International stocks 529 International Equity Portfolio SSgA 529 MSCI ACWI ex-us ETF Portfolio SSgA 529 S&P World ex-us ETF Portfolio Alternative 529 Realty Income Portfolio Fixed income 529 Core Bond Portfolio 529 Short Duration Bond Portfolio 529 Inflation Managed Bond Portfolio Money market 529 Prime Money Market Portfolio* FOR MORE DETAILED INFORMATION ABOUT PLAN PORTFOLIOS AND UNDERLYING INVESTMENTS, PLEASE CONSULT YOUR FINANCIAL ADVISOR, VISIT OR REVIEW THE ADVISOR-GUIDED PLAN DISCLOSURE BOOKLET. J.P. MORGAN ASSET MANAGEMENT 9

12 Meet your investment advisors J.P. Morgan Asset Management J.P. Morgan Asset Management is a leading investment manager for institutions, financial intermediaries and individual investors worldwide. With a heritage of more than a century, a broad range of core and alternative strategies and investment professionals operating in every major world market, we offer investment experience and insight aimed at helping you reach your goals. Multi-Asset Solutions J.P. Morgan Multi-Asset Solutions draws upon over 40 years of experience in managing multi-asset class portfolios. With over 00 investment professionals worldwide, they manage over $70 billion in AUM across flexible, outcome-oriented, quantitative and convertibles strategies, for a broad range of clients including institutions, advisors and individuals. For Advisor-Guided Plan portfolios, they will allocate assets, select underlying J.P. Morgan investments, monitor holdings and make adjustments based on each portfolio s risk-return objectives and changing market conditions. State Street Global Advisors Funds Management [SSgA FM] State Street Global Advisors Funds Management exchange traded fund portfolios are available in the investment lineup. They have attained ETF industry leadership with SPDR, including first-to-market launches with gold, international real estate and fixed income and sector ETFs. 2 As of September, SPDR is a registered trademark of Standard & Poor s Financial Services LLC ( S&P ) and has been licensed for use by State Street Corporation. No financial product offered by State Street Corporation or its affiliates is sponsored, endorsed, sold or promoted by S&P or its affiliates, and S&P and its affiliates make no representation, warranty or condition regarding the advisability of buying, selling or holding units/shares in such products. Further limitations and important information that could affect investors rights are described in the prospectus for the applicable product. 0 NEW YORK S 529 ADVISOR-GUIDED COLLEGE SAVINGS PROGRAM

13 Compare your college savings options A 529 plan offers benefits not typically found in other types of education accounts. Advisor-Guided Plan UGMA/UTMA Custodial Accounts Coverdell Education Savings Account Series EE and I Savings Bonds Tax-free withdrawals for qualified education expenses New York state income tax deductions on contributions PLANNING TIP No age limits on beneficiaries or contributors Flexibility to change beneficiaries Account owner control no matter what the beneficiary s age Start early, stay invested for the long run. The sooner you start investing, the greater your potential to grow money through the power of taxfree compounding. Remember, you can generally contribute for a beneficiary of any age. Assets intended specifically for education Assets removed from estate without losing control 2 Tax-free accelerated gifting Minimal impact on financial aid eligibility when parent owned No income limits restricting eligibility Covers tuition and fees only. Costs of room and board and books are not eligible expenses. Additional restrictions apply. 2 Assuming account owner and contributor is the same person. J.P. MORGAN ASSET MANAGEMENT

14 FREQUENTLY ASKED QUESTIONS Learn more about the Advisor-Guided Plan Contributing to my account Q. Who can set up an account? A. The Plan is open to all U.S. citizens and resident aliens who have a Social Security number or Tax ID. Even entities such as trusts can establish an account. Q. Can I deduct account contributions from federal income taxes? A. No, but investment earnings are tax deferred and withdrawals are income tax free when used for qualified higher education expenses. Account owners who are New York taxpayers can deduct up to $5,000 in contributions from their state income taxes each year ($0,000 if married and filing jointly). 2 Because the Advisor-Guided Plan offers investments and services not available from other 529 plans, it may make sense even if you don t live or work in New York. This is especially true if your home state allows you to deduct contributions made to out-of-state plans. Consult your tax and financial advisors for more information. Q. Can I fund my account with transfers from other education plans? A. Yes, you can make tax-free transfers from another 529 plan to the Advisor-Guided Plan for the same beneficiary once every 2 months. Assets can also be transferred from UGMA/UTMA accounts, Coverdell accounts and qualified U.S. savings bonds, though taxes and restrictions may apply in some cases. Q. How can I contribute to my account? A. Contribute by check, electronic bank transfer, automatically scheduled contributions, payroll direct deposit, rollovers from another 529 plan or transfers from other education plans. Q. Can I contribute for more than one beneficiary? A. Yes, you can open a separate account for each beneficiary s college education. Q. Can other people contribute for my beneficiary? A. Yes, family and friends can open separate accounts for your beneficiary or they can contribute directly to your account. In either case, account balances for a beneficiary cannot exceed $375,000. After that, accounts can grow only through investment earnings. Q. Can I change how my contributions are invested? A. Yes, federal law allows you to reallocate existing Plan assets twice every calendar year or when changing beneficiaries. You can change how future contributions are invested at any time. Earnings on non-qualified withdrawals may be subject to federal income tax and a 0% federal penalty tax, as well as state and local income taxes. 2 Deductions may be subject to recapture in certain circumstances, such as rollovers to another state s plan or non-qualified withdrawals. 2 NEW YORK S 529 ADVISOR-GUIDED COLLEGE SAVINGS PROGRAM

15 Using my account assets Q. What qualifies as a higher education expense? Q. Does my beneficiary have to attend college in New York? A. Eligible expenses can include tuition, fees, certain room and board expenses, books and supplies at any eligible institution of higher education. A. No, the Plan is sponsored by the State of New York, but account assets may be used at most public or private institutions in the United States and overseas. For example, a New York resident can help a child in New Jersey attend college in Florida. Q. What happens if I withdraw money for non-qualified reasons? Q. What if my beneficiary doesn t attend college or has money left over? Q. What if my beneficiary receives a scholarship? Q. How do Plan assets affect federal financial aid eligibility? Q. Can I use the Plan to pay for private elementary school or high school? A. Investment earnings are typically subject to federal income taxes and an additional 0% federal penalty tax, plus any applicable state and local taxes. A. Possible options include: Keep the account open in case your beneficiary decides to attend college later in life or enroll in graduate school Transfer some or all Plan assets to another member of the original beneficiary s family Make a non-qualified withdrawal, subject to taxes and penalties A. You can withdraw an amount equal to the scholarship without incurring the 0% federal penalty tax, though income taxes on any earnings withdrawn would still apply. Any remaining assets could go toward qualified expenses not covered by the scholarship, or you can transfer them to another beneficiary. A. When parents own the 529 account and the student is a dependent, a maximum of 5.64% of Plan assets are factored into federal financial aid formulas. That rate is 20% for any accounts you may have in the child s name, including CDs, savings accounts or UGMAs/UTMAs. Different policies may apply when grandparents or other contributors own the 529 account. A. No, 529 plans are designed specifically for higher education. A Coverdell Education Savings Account may help you prepare for pre-college expenses. Section 529 defines a family member as a son, daughter, stepson or stepdaughter or a descendant of any such person; a brother, sister, stepbrother or stepsister; a father or mother or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the father or mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; the spouse of the beneficiary or the spouse of any individual described above; or a first cousin of the beneficiary. Gift or generation-skipping transfer taxes may apply. Please consult your tax advisor for more information. J.P. MORGAN ASSET MANAGEMENT 3

16 Learn more about the Advisor-Guided Plan CONSULT YOUR FINANCIAL ADVISOR Work together to develop your college plan, open an account, choose portfolios and maximize the benefits of 529 investing. VISIT Log on to access your account along with additional Plan information and investing tools. CALL Speak with one of our service representatives between 8am and 7pm ET, M-F. INVESTMENTS ARE NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE Before you invest, consider whether your or the beneficiary s home state offers any state tax or other benefits that are only available for investments in that state s qualified tuition program. The Comptroller of the State of New York and the New York State Higher Education Services Corporation are the Program Administrators and are responsible for implementing and administering the Advisor-Guided Plan. Neither the State of New York nor its agencies insures accounts or guarantees the principal deposited therein or any investment returns on any amount or investment portfolio. Ascensus Broker Dealer Services, Inc. and Ascensus Investment Advisors, LLC serve as Program Manager and Recordkeeping and Servicing Agent, respectively, and are responsible for day-to-day operations, including effecting transactions. J.P. Morgan Investment Management Inc. serves as the Investment Manager. J.P. Morgan Asset Management is the marketing name for the asset management businesses of Chase & Co. Distribution Services, Inc. markets and distributes the Advisor-Guided Plan. Distribution Services, Inc. is a member of FINRA/SIPC. New York s 529 College Savings Program includes two separate 529 plans. The Advisor-Guided Plan is sold exclusively through financial advisors who have entered into Advisor-Guided Plan selling agreements with Distribution Services, Inc. You may also participate in the Direct Plan, which is sold directly by the Program and offers lower fees. However, the investment options available under the Advisor-Guided Plan are not available under the Direct Plan. The fees and expenses of the Advisor-Guided Plan include compensation to the financial advisor. Be sure to understand the options available before making an investment decision. For more information about New York s 529 Advisor-Guided College Savings Program, you may contact your financial advisor or obtain an Advisor- Guided Plan Disclosure Booklet and Tuition Savings Agreement at or by calling This document includes investment objectives, risks, charges, expenses, and other information. You should read and consider it carefully before investing. The Program Administrators, the Program Manager and Distribution Services, Inc., and their respective affiliates do not provide legal or tax advice. This information is provided for general educational purposes only. This is not to be considered legal or tax advice. Investors should consult with their legal or tax advisors for personalized assistance, including information regarding any specific state law requirements. Ugift is a registered service mark of Ascensus Broker Dealer Services, Inc. September BRO-CLIENT