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What is a 529 plan?
•
•
•
•
A way for families to save for college
Available to investors nationwide
Proceeds can be used for any college
An investment account with tax advantages
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Benefits of a 529 plan
• Anyone can contribute to the account
• You can change beneficiaries at any time
• You have other options if the child does not
attend college
• Control of the account will not shift to the child
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The tax-smart way to save
• You pay no federal income taxes
– On your earnings while the account is invested
– When you withdraw money to pay for college expenses
Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply. Withdrawals
for qualified higher education expenses subject to tax if American Opportunity Credit or Lifetime Learning Credit is claimed for same expenses. If
withdrawing funds for qualified higher education expenses from both a 529 account and a Coverdell Education Savings Account, a portion of the earnings
distribution may be subject to tax and penalty on amounts that exceed qualified higher education expenses. Read the offering statement for details.
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The tax-smart way to save
• Gift tax benefits: Make five years’ worth of gifts
without triggering the federal gift tax
• Maximum for individuals: $70,000 for 2016
• Maximum for married couples: $140,000
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The tax-smart way to save
A 529 account can help decrease your taxable estate
Grandparents
$700,000
$140,000
$140,000
$140,000
$140,000
$140,000
Ω
Ω
Ω
Ω
Ω
Ω
Married couples filing jointly may contribute up to $140,000 per beneficiary. Individuals may contribute up to $70,000. Contributions are generally treated
as gifts to the beneficiary for federal gift tax purposes and are subject to annual federal gift tax exclusion amount ($14,000 for 2016). Contributor may
elect to treat contribution in excess of that amount (up to $70,000 for 2016) as pro-rated over 5 years. Election is made by filing a federal gift tax return.
While contributions are generally excludable from contributor’s gross estate, if electing contributor dies during 5-year period, amounts allocable to years
after death are includible in contributor’s gross estate. Consult your tax advisor for more information.
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$500 monthly contributions at a
hypothetical 6% annual growth rate
$193,677
Hypothetical
529
account value
Your savings
accumulate faster
because account
is not taxed
$81,940
$34,885
$75,007
$163,477
Hypothetical
taxable
account value
$33,446
5 years
10 years
18 years
This example assumes contributions of $500 per month, a hypothetical 6% nominal rate of return compounded monthly with an effective
return of 6.17%, and a 28% tax bracket for the taxable account. Performance shown is for illustrative purposes and is not related to an actual
investment. Regular investing does not ensure a profit or protect against loss in a declining market. Capital gains, exemptions, deductions, and local
taxes are not reflected. Certain returns in a taxable account are subject to capital gains tax, which is generally a lower rate than ordinary income tax
rates and would make the investment return for the taxable investment more favorable than reflected on the chart. Investors should consider their
personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision. These may further impact the
results of the comparison.
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Start early, contribute often
The Jones family
starts saving today,
contributing
$340 every month
The Smith family
waits 10 years
to start saving,
contributing
$1,219 every month
Total contribution
$73,440
Total contribution
$117,024
Earnings
Account value
$89,714
$163,154
after 18 years
Earnings
$46,130
Account value
$163,154
after 8 years
This chart is for illustrative purposes only and is not intended to be representative of past or future performance.
The Jones family saves $340 monthly for 18 years. The Smith family saves $1,219 monthly for 8 years. Assumes a hypothetical 8% annual return
compounded monthly.
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Let the whole family contribute
The Jones
grandfather
makes an initial
contribution of
$14,000
Total
contribution
$62,816
Earnings
$104,491
Account value
$167,307
after 18 years
The Jones parents
contribute $226 every
month
This chart is for illustrative purposes only and is not intended to be representative of past or future performance.
The Jones grandfather makes a lump-sum contribution of $14,000 today. The Jones parents contribute $226 each month.
Assumes a hypothetical 8% annual return compounded monthly.
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A wide range of investment
choices
• Age-based portfolios
• Goal-based portfolios
• Individual fund options from Putnam and other firms
• Putnam Absolute Return Funds
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Age-based portfolios
Actively managed and adjusted over time, becoming more
conservative as your child approaches college age
Newborn
Stocks
15%
Bonds
Cash
85%
4
8
12
18
14%
26%
60%
Asset allocations shown are target allocations. Actual allocations may vary.
The age-based and goal-based options invest across four broad asset categories: short-term investments, fixed-income investments, U.S. equity
investments, and non-U.S. equity investments. Within these categories, investments are spread over a range of asset allocation portfolios that
concentrate on different asset classes or reflect different styles.
Each age-based portfolio has a different target date, which is based on the year in which the beneficiary of an account was born. The principal value of
the funds is not guaranteed at any time, including age-based portfolios closest to college age.
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Goal-based portfolios
Actively managed and keep the same allocation mix, regardless of the
child’s age
Stocks
Bonds
Cash
Balanced
Growth
34%
15%
Aggressive growth
100%
60%
85%
6%
Balanced Option
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•
•
Putnam 529 GAA Growth
Portfolio
Putnam 529 Balanced Portfolio
Putnam 529 Money Market
Portfolio
Growth Option
•
Invests in the Putnam 529 GAA
Growth Portfolio and Putnam
529 All Equity Portfolio
Aggressive Growth Option
•
Invests in the Putnam 529 GAA
All Equity Portfolio
Allocations shown are target allocations; actual allocations may vary. See the offering statement for details.
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Individual investment options
Build your own portfolio with a range of choices
Stocks
• Putnam Equity Income Fund
Option
• Putnam International Capital
Opportunities Fund Option
Bonds
• Putnam High Yield Trust Option
• Putnam Income Fund Option
Cash
Capital preservation money market:
Putnam Money Market Fund Option*
• Federated U.S. Government
Securities Fund: 2-5 years Option
• Putnam Voyager Fund Option
• Putnam Small Cap Value Fund
Option
• MFS Institutional International
Equity Fund Option
• Principal MidCap Blend Fund
Option
• SSgA S&P 500® Index Fund Option
* Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money
market fund. Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency.
The plan involves investment risk, including the loss of principal.
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Absolute Return Funds
• Putnam 529 for America is the only 529 account to offer a suite of absolute
return funds as an investment option
• The funds target positive 3-year returns of 1%, 3%, 5%,
+7%
or 7% above inflation as measured by T-bills and
+5%
with lower relative volatility
Absolute return investing can
be an ally in helping to navigate
today’s market volatility
+1%
Putnam Absolute
Return 100 ®
+3%
Putnam Absolute
Return 300 ®
Putnam Absolute
Return 500 ®
Putnam Absolute
Return 700 ®
Chart does not represent the performance of Putnam Absolute Return Funds. Actual performance can be found on putnam.com.
The funds’ strategies are designed to be largely independent of market direction, and the funds are not intended to outperform stocks and bonds during
strong market rallies. There is no guarantee that the funds will meet their objectives.
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Putnam Absolute Return Funds
Putnam
Absolute Return
100 Fund
option
Putnam
Absolute Return
300 Fund
option
Putnam
Absolute Return
500 Fund
option
Putnam
Absolute Return
700 Fund
option
For investors considering
short-term securities.
Invests in bonds and cash
instruments.
For investors considering
a bond fund. Invests in
bonds and cash
instruments.
For investors considering
a balanced fund. Can
invest in bonds, stocks, or
alternative asset classes.
For investors considering
a stock fund. Can invest in
bonds, stocks, or
alternative asset classes.
®
®
®
®
The funds’ strategies are designed to be largely independent of market direction, and the funds are not intended to outperform stocks and bonds during strong market rallies.
Consider these risks before investing: Our allocation of assets among permitted asset categories may hurt performance. The prices of stocks and bonds in the funds’ portfolio may fall
or fail to rise over extended periods of time for a variety of reasons, including both general financial market conditions and factors related to a specific issuer or industry. Our active trading
strategy may lose money or not earn a return sufficient to cover associated trading and other costs. Our use of leverage obtained through derivatives increases these risks by increasing
investment exposure. Bond investments are subject to interest-rate risk, which means the prices of the funds’ bond investments are likely to fall if interest rates rise. Bond investments also
are subject to credit risk, which is the risk that the issuer of the bond may default on payment of interest or principal. Interest-rate risk is generally greater for longer-term bonds, and credit risk
is generally greater for below-investment-grade bonds, which may be considered speculative. Unlike bonds, funds that invest in bonds have ongoing fees and expenses. Lower-rated bonds
may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. International
investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including
illiquidity and volatility. The use of derivatives involves additional risks, such as the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the
instrument to meet its obligations. The funds may not achieve their goal, and they are not intended to be a complete investment program. The funds’ effort to produce low volatility returns
may not be successful and may make it more difficult at times for the funds to achieve their targeted return. In addition, under certain market conditions, the funds may accept greater volatility
than would typically be the case, in order to seek their targeted return. For the 500 Fund and 700 Fund, these risks also apply: REITs involve the risks of real estate investing, including
declining property values. Commodities involve the risks of changes in market, political, regulatory, and natural conditions. Investments in small and/or midsize companies increase the risk of
greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Additional risks are listed in the funds’ prospectus.
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How much can you contribute?
• No minimum investment
• Contributions can occur until the account value
reaches $370,000*
• Contribute five years’ worth of gifts in a single year
A gift of $70,000 in 2016 would constitute five years’ worth of gifts. Additional gifts made for the same beneficiary in the same five-year period would be
subject to federal gift taxes. Election is made by filing a federal gift tax return. If the electing contributor dies during the 5-year period, amounts allocable
to year after death are inducible in the contributor’s gross estate.
* Contribution limit as of 1/1/16. Subject to periodic review.
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Many ways to contribute
• Invest a lump sum
• Establish a dollar cost averaging program
• Establish a systematic investment program
from your bank
• Encourage contributions with gift certificates
Systematic investing and dollar cost averaging do not assure a profit or protect against loss in a declining market. You should consider your ability to
continue investing during periods of low prices.
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Withdrawals are easy
• You tell us how to
make out the check
• Mail the completed form
to Putnam Investments
Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. State taxes may apply.
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Easy to set up
• Call a Putnam Implementation Specialist
– To complete a 529 employer information form
– To determine how contributions will be made:
– Payroll deduction
– Systematic employee bank draft
• Provide employees with information about Putnam 529 for America
– Generate awareness using Putnam announcement letter
– Schedule enrollment meetings
– Employees can enroll online or by mailing an application
to Putnam
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ERISA
• By its design, Putnam 529 for America is not
intended to be subject to ERISA
• Employers should consult legal counsel to ensure
product implementation does not subject their
plan to ERISA
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Putnam.com/corporate 529
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Putnam is here to help
Corporate 529 Implementation Specialist
for setup and ongoing service:
1-800-634-1591
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