North Carolina’s National College Savings Program Your NC 529 Plan.

North Carolina’s National College Savings Program

Your NC 529 Plan

North Carolina’s 529 Plan

• Most families will pay at least a portion of their children’s (or other family member’s) college expenses.

• That is much easier to do when you plan ahead. • A 529 college savings plan can get you started

on your share of future expenses.


• What is a 529 plan?– Federal law allows states to develop “qualified

tuition programs” with tax advantages to help families save for college.

– “529” refers to the section of the Internal Revenue Code creating these programs.

– Every 529 plan enables participants to qualify for federal tax benefits. North Carolina taxpayers contributing to the NC 529 plan get state tax benefits as well.


• The North Carolina General Assembly authorized a 529 Program for the State in 1996.

• In 1998, a single investment option program, the College Vision Fund was launched.

• In December, 2001, that program was replaced by a new, multi-investment option 529 plan, North Carolina’s National College Savings Program (the NC 529 Plan).


• North Carolina’s 529 Plan– Established and maintained by the

North Carolina State Education Assistance Authority

– Administered by College Foundation, Inc. (CFI)– Open to residents of any state– Direct enrollment through CFI, which means no

fees or sales charges for enrolling.

• The General Assembly has established the Parental Savings Trust Fund, of which the Authority is trustee, to hold all assets of the Program, but assets are not the property of the State.


• Accessible• Affordable• Tax-free earnings and state tax deduction on

contributions• Flexible• Comprehensive

This presentation provides general information about the Program and shall not constitute an offer to sell any interests in the Program. An offer of interest in the Program may be made only by the official Program Description for North Carolina’s National College Savings Program and an official Enrollment Agreement. Before opening an Account, or contributing funds to an existing Account, you should carefully read and consider the Program Description, which includes information on investment objectives, risks, charges, expenses and other important information. Check with your home state about tax or other benefits associated with investing in its own qualified tuition plan.


• Accessible– Any adult can open an account to help anyone

who plans to go to college, regardless of the beneficiary’s age or their relationship. For example, a parent may open for a newborn, a grandparent for a grandchild or a neighbor for a friend.

– An individual can even open an account for himself or herself.


• Affordable– Low Annual Fund Fees and Expenses (from less

than 0.30% to only 0.90%)"– Minimum Contribution Amount of $25 – Contribute when you want, how you want

• On-occasion or regularly scheduled• Lump-sum or Automatic


– Lump Sum• Personal Check • Electronic Funds Transfer (EFT)• Transfer or Rollover from

– Another Section 529 account– Coverdell Education Savings Account– Qualified savings Bond (Series EE or I

issued after 1989)


• Automatic Investment Plans• Recurring Bank Draft

– Once or twice per month• Payroll Deduction

– Employer must be set up with NC 529 Plan to transmit employee contributions

– Employee must have a Payroll Deduction Authorization Agreement on file with NC 529 Plan


• Tax-free– North Carolinians pay no federal or North Carolina

income taxes on account earnings when distributions are used to pay for qualified higher education expenses.

– Out-of-state residents pay no federal income taxes on account earnings, but should check with a tax advisor regarding state taxes.

The features of a qualified tuition program are complex and involve significant tax issues. The earnings portion

of withdrawals not used for qualified higher education expenses are subject to federal income tax and a 10%

federal penalty tax, as well as state and local income taxes. The availability of tax benefits may be contingent on

meeting other requirements.


• Tax Deduction– North Carolina taxpayers are eligible for a State

income tax deduction for contributions to the NC 529 Plan of up to $2,500 ($5,000 for married couple, filing jointly) per year.

• Under current North Carolina law, these deductions will be subject to Adjusted Gross Income (AGI) limitations beginning January 1, 2012

• You should consult your financial, tax, or other advisor to learn more about how this deduction may apply to your specific circumstances.


• Flexible– Savings may be used for the beneficiary’s

college costs at virtually any college, anywhere.

– May change future contributions any time.– May reallocate current funds twice in

calendar year 2009 by special ruling of the IRS.


• Comprehensive– Select investment options that meet your

objectives, consider the time remaining until your beneficiary needs the money for college, and your tolerance for risk.

– You may choose one or more of the following options.


• Aggressive Stock Fund (Managed by NCM Capital Management Group, Inc.)– Offers stock portfolio, NCM Capital’s Focused

Equity Discipline • Dependable Income Fund (Managed by the NC

State Treasurer)– Offers a portfolio of income securities

designed to produce a solid return with minimal risk of principal

– NC State Treasurer’s Short Term Investment Portfolio (STIP)


• V Funds (Mutual Funds from The Vanguard Group)– Eight Individual V Fund Investment Options

comprised of underlying Vanguard mutual funds– Participants may select from one to all eight funds– Three Age-Based V Fund Investment Options

• Conservative Track• Moderate Track• Aggressive Track• The beneficiary’s age determines placement

within the risk band you select.


+ The V Fund 5’s investment in the Vanguard Prime Money Market Fund is not insured or guaranteed by the FederalDeposit Insurance Corporation or any other government agency. Although the underlying Vanguard Fund seeks to preserve the value of the investment at $1 per share, it is possible that the V Fund 5 may lose money by investing in the underlying Vanguard Fund. Investments in the plan are subject to risk and Participants should carefully read the Program Description for NC’s National College Savings Program effective June 29, 2009 for more information.

Individual V Fund Investment Options

(Comprised of underlying funds from The Vanguard Group) Individual V Funds Underlying Vanguard Mutual Fund Asset Allocation

V Fund 1 Vanguard LifeStrategy Growth Fund

80% Stock 20% Bond

V Fund 2 Vanguard LifeStrategy Moderate Growth Fund

60% Stock 40% Bond

V Fund 3 Vanguard LifeStrategy Conservative Growth Fund

40% Stock 40% Bond 20% Short-Term Investment

V Fund 4 Vanguard LifeStrategy Income Fund

20% Stock 60% Bond 20% Short-Term Investment

V Fund 5† Vanguard Prime Money Market Fund

100% Money Market Investment

V Fund 6 Vanguard Total Stock Market Index Fund

100% Stock

V Fund 7 Vanguard Total International Stock Index Fund

100% Stock

V Fund 8 Vanguard Total Bond Market Index Fund

100% Bond


Age-Based V Fund Investment Options(Comprised of Underlying Mutual Funds from The Vanguard Group)

Age of Beneficiar

y

Aggressive Track Moderate Track Conservative Track

Newborn-5

V Fund 1(Vanguard LifeStrategy Growth Fund)

V Fund 1(Vanguard LifeStrategyGrowth Fund)

V Fund 2(Vanguard LifeStrategy Moderate Growth Fund)

6-10 V Fund 1(Vanguard LifeStrategyGrowth Fund)

V Fund 2(Vanguard LifeStrategyModerate Growth Fund)

V Fund 3(Vanguard LifeStrategy Conservative Growth Fund)

11-15 V Fund 2(Vanguard LifeStrategyModerate Growth Fund)

V Fund 3(Vanguard LifeStrategy Conservative Growth Fund)

V Fund 4(Vanguard LifeStrategy Income Fund)

16-18 V Fund 3(Vanguard LifeStrategyConservative Growth Fund)

V Fund 4(Vanguard LifeStrategyIncome Fund)


19 & older V Fund 4(Vanguard LifeStrategyIncome Fund)


V Fund 5 +(Vanguard LifeStrategyPrime Money Market Fund)


Online access at CFNC.org/NC529 for– Easy Enrollment– Account Information– Account Maintenance– Frequently Asked Questions– Savings Calculators

• Representatives available at 800-600-3453 to answer your questions Monday – Thursday 8 a.m. to 8 p.m. and Friday 8 a.m. – 5 p.m.

Comparison of College Savings Programs

North Carolina’s 529 Plan (for higher education)

Coverdell Education Savings Account (formerly Education IRA) (for secondary or higher education)

Who can contribute Anyone Anyone

Annual contributions $382,032 (for 2009) Reviewed annually NC tax deduction on contributions

$2,000 per beneficiary/per year

Account owner/control Participant (Account owner) Beneficiary may obtain control at age of majority

Age of Beneficiary for contributions

Any age Up to age 18*

Taxes on qualifiedwithdrawals

No federal or North Carolina income taxes

No federal or North Carolina

income taxes

Timing of withdrawals Whenever the Beneficiary goes to college

Beneficiary receives remainder in account at age 30*

Income restriction None Adjusted Gross Income limits apply; phases out at $110,000 (single filers) and $220,000 (joint filers)

*Does not apply in case of special needs Beneficiary.

Savings Calculator

• Online savings calculator helps you approximate future college costs and estimate your possible savings growth at various rates of return

The Investment Options are not guaranteed by the State of North Carolina, the State Education Assistance Authority, College Foundation, Inc., or any investment manager. Participation in the Program involves investment risk, which may include the loss of principal. Accounts are not bank deposits, are not insured by the FDIC, any governmental unit or private person and may lose value. Participants assume all responsibility for federal and state tax consequences.

Enrollment Forms and Other Information

• Online CFNC.org/NC529

• E-mail [email protected]

• Toll free Number 800-600-3453

This presentation provides general information about the Program and shall not constitute an offer to sell any interests in the Program. An offer of interest in the Program may be made only by the official Program Description for North Carolina’s National College Savings Program and an official Enrollment Agreement. You should carefully read the Program Description, which has complete information on options, fees, expenses, risks, and restrictions, before making a decision to invest. The features of 529 Qualified Tuition Programs are complex and involve significant tax issues.

North Carolina’s National College Savings Program Your NC 529 Plan.

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