Aim High For Higher Education. Edvest: Wisconsin s 529 College Savings Plan

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1 Aim High For Higher Education Edvest: isconsin s 529 College Savings Plan

2 3 Aim High for your Child s Future 4 How Edvest orks 5 Edvest Offers Tax Advantages 6 Edvest is Flexible to Use 7 Investment Options 8 Choose your Own Investment Strategy 9 Age-Based Investment Options 10 Multi-Fund Investment Portfolios 11 Single Fund Investment Options 12 Your Questions Answered 13 Still Have Questions? 14 An Education Plan is Important. Choosing the Right One for you is Essential. 2 Edvest.com (888)

3 Aim High for your Child s Future As a parent, you want to give your child or loved one a good education and a strong future. Higher education offers students a chance to open their minds, acquire knowledge and develop skills. hether a four-year college, community college or technical school, higher education can translate into higher earning power and steadier employment throughout one s career. Students need to be prepared educationally and financially for higher education. ithout help, many students could graduate with unwanted debt, potentially limiting their ability to buy a first home, provide for their families and save for retirement. But saving for college doesn t have to be overwhelming. There are a variety of resources you can tap. Ask relatives, such as grandparents, for support, since a cash gift for college can have a lasting and meaningful effect. In addition, the Edvest College Savings Plan can help. ith tax advantages, gift ideas, low fees and automatic contribution plans, Edvest s flexible features can go a long way toward helping you achieve your college savings goals. Ready to Enroll? Two Easy ays: Online at Edvest.com Complete and mail the enclosed application, along with your initial contribution, to: Edvest College Savings Plan P.O. Box Boston, MA e re here to help. Call us toll-free at (888) Visit our website at Edvest.com. Check out other online resources designed to help families plan for higher education. These include: Studentaid.ed.gov and Edpubs.gov. Higher Earnings Expected Full-Time Lifetime Earnings Relative to High School Graduates, by Education Level Earnings Ratio Less than a High School Diploma High School Diploma Some College, No Degree Associate Degree Bachelor s Degree Education Level Master s Degree Doctoral Degree Professional Degree Source: The College Board, Education Pays Note: Based on the sum of median 2011 earnings for full-time year-round workers at each age from 25 to 64 for each education level. No allowance is made for the shorter work life resulting from time spent in college or out of the labor force for other reasons. Future earnings are discounted at a 3% annual rate to account for the reality that because of forgone interest, dollars received in the future are not worth as much as those received today. Discounting does not have a large impact on the lifetime earnings ratios. The calculations are illustrative and do not represent what individuals will actually earn in the future. Earnings ratios calculated using data from another year will likely yield slightly different results. For example, the earnings ratio of bachelor s degree recipients to high school graduates is 1.61 based on 2005 earnings data, 1.66 based on 2008 earnings data, and 1.65 based on 2011 earnings data. Sources: U.S. Census Bureau, 2012, Table PINC-03; calculations by the authors. 3 Edvest.com (888)

4 How Edvest orks Edvest is a 529 college savings plan The number 529 refers to the federal tax code section that provides federal tax advantages for qualified tuition savings programs. 401(k) plans are named after a federal tax code section as well. A 401(k) plan helps you save for retirement. A 529 college savings plan helps you save for college. ho can Open an Account? The Edvest College Savings Plan is open to everyone. Parents, grandparents, friends and relatives at any income level can open an account for anyone. You can even open an account for yourself. Plus, more than one person can contribute to a single account. Minimum Contribution Open an account with as little a s $25 per investment portfolio, and make additional contributions of at least $25. If your employer allows payroll deductions, the minimum contribution is $15 per investment portfolio per pay period. Maximum Account Balance The lifetime maximum account balance limit per beneficiary is $330,000. An account may continue to grow beyond the maximum account balance limit, but no further contributions will be allowed. Starting Early can Help The more time your money has to grow, the more compounding can work in your favor. Opening an account when your loved one is a baby means that your money has up to 18 years to grow! Encourage Support From Others Grandparents, other relatives and friends may give your child gifts on birthdays and other occasions. Tell them you have opened an Edvest account for your child. Ask if they would be willing to give just a small toy or book, for example, and use the rest as a cash contribution toward college savings. Even Small Contributions can be Meaningful Any amount of money that you add to your account each month, even the minimum, can lead to a stronger future for your child. $100,000 60,000 Monthly Contribution $50 $100 $200 20, Years 12 Years 18 Years Years of Accumulation This hypothetical example illustrates the future values of different regular monthly investments for different time periods and assumes an annual investment return of 6% with an initial investment of $5,000. It is presented for illustrative purposes and does not reflect actual performances or predict future results of Edvest. It does not reflect the benefits of any isconsin or federal tax benefits or withdrawals. 4 Edvest.com (888)

5 Edvest Offers Tax Advantages Save on Federal and State Taxes Contributions to the Edvest College Savings Plan may reduce a isconsin resident s state taxable income each year*. Plus, any account earnings will be free from federal and isconsin state income tax, provided withdrawals are used for qualified higher education expenses. Limitations, restrictions and/or recapture provisions may apply. See the Disclosure Booklet for details. Federal Estate and Gift Tax Benefits Contributions to Edvest may reduce the taxable value of your estate. For example, money placed in a grandchild s Edvest account, together with all the other gifts you give that grandchild in one year, may qualify for an annual federal gift tax exclusion of $14,000. Ask your tax advisor about your own situation. Couples filing jointly can contribute up to $140,000 per child and take advantage of up to five years worth of tax-free gifts at one time ($70,000 for individual filers). Completed gifts are removed from your estate for tax purposes, so your investment goes toward a child s education, not taxes. Consult your tax advisor about your situation. O ebsite Tip! How much will college cost? hen you go to Edvest.com, check out our College Savings Planner. The calculator projects college costs in your child s or loved one s time frame and calculates how much more you need to save on a periodic basis to meet those costs. The Planner includes a college cost database with approximately 3,800 colleges. Be sure to use the College Savings Planner at least once a year to make sure you re on track to meet your college savings goals. Advantages of Tax-Free Growth Potential The money that you add to your account each month can lead to a stronger future for your child. 529 Account $66,676 Taxable Account $55,092 This hypothetical example illustrates the growth of an annual investment of $2,000 made at the beginning of each year for 18 years. It assumes there are no withdrawals of contributions and earnings, a 30% combined federal, state and local income rate and a 6% annual investment return. The hypothetical example results presented are for illustrative purposes only and do not reflect past performance or guarantee future performance results of the Edvest College Savings Plan, the investment portfolios offered through the Edvest College Savings Plan and do not reflect any reduction for expenses. *The maximum contribution amount eligible for reducing a isconsin resident s 2015 state taxable income is $3,100 per beneficiary. Beginning in 2014, new rules allowed for greater amounts, based on an inflation calculation as well as the opportunity for contributions greater than the eligible amount each year to be used for subsequent years state tax benefits until exhausted. Please see Edvest.com or call (888) for the current amount. 5 Edvest.com (888)

6 Edvest is Flexible to Use O ebsite Tip! ith online access to your Edvest account, you can: Get account information Make contributions Start an Automatic Contribution Plan (ACP) Sign up for edelivery of your statements and disclosure materials Request withdrawals from your bank account on file and even send funds directly to your beneficiary s school Download account data into Quicken Visit the Edvest mobile optimized secure website to access account information and execute various transactions from your smartphone. You can Use Edvest Funds: At thousands of eligible educational institutions nationwide and at many abroad including community colleges, technical schools and graduate schools; For tuition, fees, books, supplies and equipment required for enrollment or attendance at an eligible educational institution; For certain room and board expenses. ho Controls the Money As the account owner: You maintain complete control of the account regardless of your beneficiary s age. You make the decisions from selecting the Edvest investment portfolios to withdrawing funds from your account. You can name a successor account owner and transfer ownership to another person. You can Change Beneficiaries If your loved one does not need all the money or has other funding options such as a scholarship, you may transfer funds in your account tax free to other eligible family members of the original beneficiary, including siblings, a spouse and even a first cousin. See the Disclosure Booklet for more information. You can roll the money over from another 529 college savings plan into your Edvest account and take advantage of all the benefits of Edvest. Note: Transfers and rollovers to another 529 plan may be subject to differences in features, costs and surrender charges. Indirect transfers may be subject to taxation and penalties. Consult your tax advisor about your own situation. Low Fees The Edvest College Savings Plan has no application fees, sales or maintenance. Low fees mean more of your money goes to work toward future college expenses. For more information, refer to the Fee Table in the enclosed Disclosure Booklet. Edvest s Program Manager: TIAA-CREF Tuition Financing, Inc. TIAA-CREF Tuition Financing, Inc. (TFI), part of the TIAA-CREF group of companies, is a leader in 529 college savings plan management. TFI provides program management services for Edvest. TIAA-CREF has combined assets under management of $866 billion as of March 31, TIAA-CREF is a national financial services group of companies and a leading provider of retirement services in the academic, research, medical and cultural fields. * Based on assets under management across Nuveen Investments affiliates and TIAA-CREF investment management teams as of March 31, 2015, respectively. 6 Edvest.com (888)

7 Investment Options You can direct your contributions to any one or a combination of Edvest s 22 investment options. These vary in investment strategy and degree of risk, so you can choose an option or combination of options that s right for you. hy Risk is Important Each investment portfolio has its own risks. Investments in growth stocks may be more volatile than other securities. Fixed income investing poses credit and interest risks; when interest rates rise, bond prices generally fall and the underlying fund s share price can fall. Investment returns over your investment period could be lower than the rate of increase in higher education costs. International investing involves special risks currency, political, social and economic. You could lose all or part of the value of your account. Edvest Offers Broad Categories of Investment Options Two Age-Based Investment Options including an Aggressive Option. There are nine age bands in each Age-Based Investment Option, which automatically shift to a more conservative risk level as the beneficiary gets older. Multi-Fund Investment Portfolios. Five index-based portfolios. Five active-based portfolios. Re-examine your Edvest account if: Your goals, time period for college investing or personal financial situation change. Long-term changes in the economy will affect how you save or invest. The balance in your account changes significantly due to varying performance of different investment portfolios. You can transfer from one portfolio to another twice per calendar year. You can transfer money among portfolios if you are changing the beneficiary of the account. Single Fund Investment Options Eight static portfolios that do not automatically shift allocations. Bank CD Option. Principal Plus Interest Option. 7 Edvest.com (888)

8 Choose Your Own Investment Strategy Age-based investments are very popular, but if you prefer to construct your own asset allocation, you can pick investment portfolios that more directly match your tolerance for risk, your time horizon or other factors. Unlike the Age-Based Options, however, your unique investment allocation won t automatically change as the child ages. The more you invest and the earlier you start the more opportunity your money has to grow. Calculate how much you need to save. Set your goals. Set up an automatic contribution plan (ACP) and have your contributions electronically sent from your bank account to your Edvest account. Contribute through payroll deduction if your employer offers it. 8 Edvest.com (888)

9 Age-Based Investment Options Contributions to the Age-Based Options will be placed in one of nine age bands (depending upon the age of your beneficiary), each of which has a different investment objective and investment strategy. As the child gets closer to college, assets are automatically shifted to a more conservative allocation. Edvest offers both an Age-Based Investment Option and an Aggressive Age-Based Investment Option. Allocations for the Age-Based Investment Option are illustrated below. The Aggressive Age-Based Investment Option has similar allocations except each age band will invest a larger percentage of its assets in mutual funds that invest primarily in equity securities (including real estate securities) and a smaller percentage in mutual funds that invest primarily in debt securities. O ebsite Tip! Compare College Savings Options Go to Edvest.com and use our tool for comparing many popular ways to save for college. See how custodial accounts (UGMA/UTMA), Coverdell Education Savings Accounts, and 529 college savings plans differ. Asset Allocations for the Age-Based Option Age 0 4 Age 5 8 Age % Equities 5.60% Real Estate 20.00% Bonds 65.10% Equities 4.90% Real Estate 30.00% Bonds 55.80% Equities 4.20% Real Estate 40.00% Bonds Age Age Age % Equities 3.50% Real Estate 50.00% Bonds 37.20% Equities 2.80% Real Estate 60.00% Bonds 27.90% Equities 2.10% Real Estate 70.00% Bonds Age 16 Age 17 Age % Equities 1.75% Real Estate 75.00% Bonds 18.60% Equities 1.40% Real Estate 80.00% Bonds 13.95% Equities 1.05% Real Estate 75.00% Bonds 10.00% Money Market 9 Edvest.com (888)

10 Multi-Fund Investment Portfolios If you don t want the automatic asset-allocation shift that age-based options provide, but you do want broad diversification a multi-fund portfolio may be desirable to you. You may select among five active and five index-based portfolios. Index-Based Portfolios Index-Based Aggressive Portfolio Index-Based Growth Portfolio Index-Based Moderate Growth Portfolio Index-Based Conservative Growth Portfolio Index-Based Income Portfolio Investment Objective and Strategy Seeks a favorable long-term total return, mainly through capital appreciation. Invests in a combination of index mutual funds that consist of domestic equities, international equities, fixed income and REITs, with an emphasis on mutual funds investing in equities. Seeks a favorable long-term total return, mainly through capital appreciation. Invests in a combination of index mutual funds that consist of domestic equities, international equities, fixed income and REITs, with an emphasis on mutual funds investing in equities. Seeks moderate growth by investing in a combination of index mutual funds that consist of domestic equities, international equities, fixed income and REITs. Seeks to provide moderate capital appreciation mainly though current income by investing in a combination of index mutual funds that consist of domestic equities, international equities, fixed income and REITs, with an emphasis on mutual funds investing in fixed income. Seeks to provide a moderate long-term rate of return primarily through current income by investing in a combination of index mutual funds that consist of domestic equities, international equities, fixed income and REITs, with an emphasis on mutual funds investing in fixed income. Active-Based Portfolios Active-Based Aggressive Portfolio Active-Based Growth Portfolio Active-Based Moderate Growth Portfolio Active-Based Conservative Growth Portfolio Active-Based Income Portfolio Investment Objective and Strategy Seeks a favorable long-term total return, mainly through capital appreciation. Invests in combination of actively-managed mutual funds that consist of domestic equities, international equities, fixed income and REITs, with an emphasis on mutual funds investing in equities. Seeks a favorable long-term total return, mainly through capital appreciation. Invests in a combination of actively-managed mutual funds that consist of domestic equities, international equities, fixed income and REITs, with an emphasis on mutual funds investing in equities. Seeks moderate growth by investing in a combination of actively-managed mutual funds that consist of domestic equities, international equities, fixed income and REITs. Seeks to provide moderate capital appreciation mainly through current income by investing in a combination of actively-managed mutual funds that consist of domestic equities, international equities, fixed income and REITs, with an emphasis on mutual funds investing in fixed income. Seeks to provide a moderate long-term rate of return primarily through current income by investing in a combination of actively-managed mutual funds that consist of domestic equities, international equities, fixed income and REITs, with an emphasis on mutual funds investing in fixed income. 10 Edvest.com (888)

11 Single Fund Investment Options You may want to use one or more Portfolios that invest in a single mutual fund, particularly if you have other college savings outside of Edvest and want to fine-tune your investment strategy. Unlike the Age-Based Investment Options, the Single Fund Investment Portfolios do not shift risk levels as the beneficiary gets older. Single Fund Portfolios Large-Cap Stock Index Portfolio Investment Objective and Strategy Seeks a favorable long-term total return, mainly from capital appreciation. Invests 100% of its assets in the TIAA-CREF S&P 500 Index Fund, which attempts to track a benchmark index. U.S. Equity Active Portfolio Seeks long-term capital appreciation. Invests 100% of its assets in the DFA U.S. Core Equity 1 Portfolio, an actively-managed mutual fund investing in a broad and diverse group of common stocks of U.S. companies with a greater emphasis on small-cap and value companies. U.S. Equity Index Portfolio Social Choice Portfolio Small Cap Index Portfolio International Equity Index Portfolio Balanced Portfolio Bond Index Portfolio Seeks a favorable long-term total return, mainly from capital appreciation. Invests 100% of its assets in the TIAA-CREF Equity Index Fund, which attempts to track a benchmark index. Seeks a favorable long-term total return that reflects the investment performance of the overall U.S. stock market while giving special consideration to certain social criteria. Invests 100% of its assets in the TIAA-CREF Social Choice Equity Fund, an actively-managed mutual fund. Seeks a favorable long-term total return, mainly from capital appreciation. Invests 100% of its assets in the TIAA-CREF Small-Cap Blend Index Fund, which attempts to track a benchmark index. Seeks a favorable long-term total return, mainly through capital appreciation. Assets are invested in the following mutual funds, which each attempt to track a benchmark index: TIAA-CREF International Equity Index Fund-80% and TIAA-CREF Emerging Markets Equity Index Fund-20%. Seeks to provide a favorable long-term total return through capital appreciation and income. Assets are invested in the following mutual funds, which each attempt to track a benchmark index: TIAA-CREF Equity Index Fund-65% and TIAA-CREF Bond Index Fund-35% Seeks to provide current income along with a moderate long-term rate of return. Invests 100% of its assets in the TIAA-CREF Bond Index Fund, which attempts to track a benchmark index. ant to be conservative? Edvest offers two portfolios that seek preservation of capital. Portfolio Bank CD Portfolio Principal Plus Interest Portfolio Investment Objective and Strategy Seeks income consistent with the preservation of principal by investing primarily in CDs, with a duration not to exceed 24 months, insured by the FDIC and issued by banks with a main, home, or branch office located in isconsin ( Eligible Banks ). Interest rates payable on the underlying CDs will be set by the issuing Eligible Banks based on current market conditions and are not uniform. Seeks to provide current income consistent with the preservation of principal. Assets are allocated to a Funding Agreement issued by TIAA-CREF Life to the College Savings Program Trust Fund on behalf of the Plan. The Funding Agreement provides a minimum guaranteed rate of return and allows for the possibility that additional interest may be credited. 11 Edvest.com (888)

12 Your Questions Answered 1. ho can open an account? Anyone can open an account regardless of income. This includes parents, grandparents, friends or relatives. Account owners must be a United States citizen or resident alien of legal age with a valid Social Security Number or federal Taxpayer Identification Number. 2. ho can be an account beneficiary? As the owner of the account, you can designate anyone as beneficiary even yourself. The beneficiary must have a valid Social Security Number or federal Taxpayer Identification Number. Only one person may be listed as beneficiary for each account. 3. Can more than one person contribute to the account? Anyone can contribute to an account as long as the maximum account balance does not exceed $330,000 per beneficiary. The account owner has sole control over the assets and decides when to withdraw them. 4. Can I change the beneficiary? You can change your beneficiary at any time or transfer a portion of your investment to a different beneficiary. The new beneficiary must be an eligible member of the previous beneficiary s family a sibling, for example. See the Disclosure Booklet for more information. 5. hat if my child or loved one decides not to attend college? You have three choices. You can: Keep the funds in the account. The investments will be available in future years if the beneficiary changes his or her mind about school. Change the beneficiary to an eligible family member. Consult your tax advisor about whether this may create a taxable gift. Make a non-qualified withdrawal. Any earnings will be subject to federal income tax and any applicable state income tax, as well as an additional 10% federal tax. 6. ill an Edvest account hurt my child s or loved one s chances for financial aid? If the parent is the account owner, the account assets will be treated as belonging to the parent for federal financial aid purposes. If a dependent child is the account owner, or the beneficiary of an account holding UGMA/UTMA assets, account assets are treated as a parent asset for financial aid purposes. Financial aid policies vary across post-secondary institutions, so check with the institution directly for more information. 7. hat if my child or loved one receives a full or partial scholarship? If the student receives a scholarship that covers the cost of qualified higher education expenses, you can withdraw up to the scholarship amount free of the 10% additional federal tax. However, the earnings portion of the withdrawal is subject to federal and isconsin income tax. 8. If I leave isconsin what will happen to my account? If you move to another state you can still keep your money invested in your Edvest account and you can continue contributing to it. Remember, before investing in another 529 college savings plan, consider whether the state in which you or your designated beneficiary resides has a 529 college savings plan that offers favorable state income tax or other benefits that are available only if you invest in that state s 529 college savings plan. 9. Can I roll over funds from another 529 college savings plan into Edvest? You can transfer funds for the same beneficiary once per calendar year without triggering federal or state income tax. Remember, the 529 college savings plan from which you transfer funds may be subject to differences in features, costs and surrender charges. Consult your tax advisor or the other 529 college savings plan provider before requesting a rollover. 10. How do I make withdrawals? It s easy to withdraw funds when your beneficiary is ready for college. ithdrawals can be processed online, from your smartphone or by completing and submitting a ithdrawal Request Form. 12 Edvest.com (888)

13 Still Have Questions? Visit Edvest.com for more information on the features and benefits of Edvest. Call toll free: (888) Monday through Friday from 7:00 a.m. until 7:00 p.m. CT. One of our college savings plan specialists will answer your questions. 13 Edvest.com (888)

14 An Education Savings Plan is Important. Choosing the Right One for you is Essential. Open Your Edvest Account Today Online: Edvest.com Select Open an Account. Mail: Download, complete and sign the Edvest Account Application and mail with your initial contribution. The Edvest College Savings Plan Offers these Advantages: Tax-deferred growth potential State income tax reduction on plan contributions Tax-free withdrawals for qualified education expenses Gift- and estate-tax benefits Use funds for tuition, fees, supplies, required equipment and certain room and board expenses Low minimum contributions, high account maximum Low fees Family and friends may contribute and potentially qualify to reduce their isconsin taxable income 14 Edvest.com (888)

15 Edvest.com (888) edvestconnection.com Consider the investment objectives, risks, charges and expenses before investing in the Edvest College Savings Plan. Please call toll-free or visit for a Disclosure Booklet containing this and other information. Read it carefully. Investments in the plan are neither insured nor guaranteed and there is the risk of investment loss. Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state s 529 plan. The tax information contained herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor. Non-qualified withdrawals may be subject to federal and state taxes and the additional federal 10% tax. The Edvest 529 College Savings Plan is offered by the State of isconsin. TIAA-CREF Tuition Financing, Inc. (TFI) is the Plan Manager. All social media platforms are managed by the State of isconsin. C16338 A13602:09/15 I1210.XXB