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.
North Carolina’s 529 Plan
• 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’s 529 Plan
• 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
• 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.
North Carolina’s 529 Plan
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Accessible
Affordable
Tax-free earnings 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.
North Carolina’s 529 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.
North Carolina’s 529 Plan
• Affordable
– Low total annual asset-based fees and expenses
(range from 0.25% to only 0.42%)
– Low Account fee ($1.50/month) for paper statements
and other communication; fee waived if you elect to
receive all communication electronically (“e-delivery”)
– Minimum Contribution as low as $25
– Contribute when you want, how you want
• On-occasion or regularly scheduled
• Lump-sum or automatic
North Carolina’s 529 Plan
– Lump Sum
• Personal Check
• Electronic Funds Transfer (EFT)
• Money Orders
• Transfer or Rollover from
– Another Section 529 account
– Coverdell Education Savings Account
– Qualified Savings Bond (Series EE or I issued
after 1989)
North Carolina’s 529 Plan
• Automatic Investment Plans
• Recurring 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
North Carolina’s 529 Plan
• Tax-free
– North Carolina residents’ Account earnings are free
from federal and North Carolina income taxes when
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.
North Carolina’s 529 Plan
• 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 once each calendar
year.
North Carolina’s 529 Plan
• Comprehensive
– Select investment options that meet your objectives,
fit the time remaining until your beneficiary needs the
money for college, and match your tolerance for risk.
– You may choose one or more of the following options.
North Carolina’s 529 Plan
• 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)
North Carolina’s 529 Plan
• Federally-Insured Deposit Account (Offered by State
Employee’s Credit Union)
– Provides income plus protection of principal and
earnings through federal deposit insurance
– The principal contributed and interest earned are
insured by the National Credit Union Administration
– Available to members and non-members of the State
Employee’s Credit Union
North Carolina’s 529 Plan
• Three Vanguard Age-Based Investment Options
– Beneficiary’s age determines placement within the
risk track selected
Age-Based Portfolios
• Aggressive Track
• Moderate Track
• Conservative Track
North Carolina’s 529 Plan
Vanguard Age-Based Investment Options
Age of
Beneficiary
Aggressive Track
Moderate Track
Conservative Track
Newborn-5
Vanguard Aggressive
Growth Portfolio
Vanguard Growth Portfolio
Vanguard Moderate Growth
Portfolio
6-10
Vanguard Growth Portfolio
Vanguard Moderate Growth
Portfolio
Vanguard Conservative
Growth Portfolio
11-15
Vanguard Moderate Growth
Portfolio
Vanguard Conservative
Growth Portfolio
Vanguard Income Portfolio
16-18
Vanguard Conservative
Growth Portfolio
Vanguard Income Portfolio
Vanguard Income Portfolio
19 & older
Vanguard Income Portfolio
Vanguard Income Portfolio
Vanguard Money Market
Portfolio
North Carolina’s 529 Plan
Vanguard Individual Investment Options
INDIVIDUAL PORTFOLIOS
DESCRIPTION
Vanguard Aggressive Growth
Portfolio
Seeks growth of capital.
Vanguard Growth Portfolio
Seeks growth of capital and low to moderate
income.
Vanguard Moderate Growth
Portfolio
Seeks growth of capital and current income.
Vanguard Conservative Growth
Portfolio
Seeks current income and low to moderate growth
of capital.
Vanguard Income Portfolio
Seeks current income.
Continued on next screen
North Carolina’s 529 Plan
Vanguard Individual Investment Options
INDIVIDUAL PORTFOLIOS
DESCRIPTION
Vanguard Money Market Portfolio*
Seeks to provide income consistent with the
preservation of principal.
Vanguard Total Stock Market Index
Portfolio
Seeks to track the performance of a benchmark
index that measures the investment return of the
overall stock market.
Vanguard Total International Stock
Index Portfolio
Seeks to track the performance of a benchmark
index that measures the investment return of
stocks issued by companies located in developed
and emerging markets, excluding the United
States.
Vanguard Total Bond Market Index
Portfolio
Seeks to track the performance of a broad, marketweighted bond index.
*Investment in the Money Market Portfolio is not insured or guaranteed by the FDIC 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 fund may lose money by investing in the
underlying fund.
Investments are subject to risk and Participants should carefully read the Program Description for North Carolina’s National College Savings
Program for more information.
North Carolina’s 529 Plan
Online access at CFNC.org/NC529 for
– Easy Enrollment
– Account Information
– Account Maintenance
– Frequently Asked Questions
– Savings Calculator
• Representatives available to answer your questions
Monday – Thursday 8 am - 8 pm and Friday 8 am - 5 pm
toll free 800-600-3453 or local line 919-828-4904
(Raleigh).
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
$410,000(for 2014) Reviewed
annually
$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 (age limit does not apply in case
of special needs Beneficiary)
Taxes on qualified
withdrawals
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)
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.
How are 529 Plans reported on FAFSA
• Considered an Investment/Asset
- Includes qualified educational benefits or education
savings accounts (e.g., Coverdell savings accounts, 529
college savings plans and the refund value of 529 prepaid
tuition plans)
• Student’s Asset
- Question 42. As of today, what is the net worth of your (and
spouse’s) investments, including real estate? Don’t include the home
you live in. Net worth means current value minus debt.
For a student who does not report parental information, the
accounts owned by the student (and/or the student’s spouse)
are reported as student investments
How are 529 Plans reported on FAFSA
• Parent’s Asset
- Question 91. As of today, what is the net worth of your parents’
investments, including real estate? Don’t include the home in which
your parents live. Net worth means current value minus debt.
For a student who must report parental information, the
accounts are reported as parental investments,
including all accounts owned by the student and all
accounts owned by the parents for any member of the
household
How are 529 Plans reported on FAFSA
• Student’s Untaxed Income
– Question 45 j. Money received, or paid on your behalf (e.g., bills), not
reported elsewhere on this form. This includes money that you received
from a parent whose financial information is not reported on this form
and that is not part of a legal child support agreement.
Includes distributions to the student beneficiary from a
529 plan that is owned by someone other than the
student or his parents (such as grandparents, aunts,
and uncles)
How 529 Plans Impact Financial Aid
• If owned by the students or parents - reduces needbased aid by maximum of 5.64% of total asset value
• If owned by independent student – reduces need-based
aid by maximum of 20% of total asset value
• If owned by grandparents, etc. – withdrawals count as
untaxed income for the following FAFSA filing year. May
reduce need-based aid by 50% of withdrawal amount
NC 529 Scholarship Contest
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Sponsored by the NC 529 Plan and SECU
1 winner from each of 100 counties
$529 Scholarship
Random drawing held May 29
Current NC 529 account holders automatically entered
per account
• Non-NC 529 account holders must enter (If contest
participant wins, must open a NC 529 account to receive
scholarship)
NC 529 Scholarship Contest
• Enter online at NC529Scholarship.org OR
• Enter by mailing a 4x6 postcard to:
NC529 Scholarship Contest
300 South Liberty Street
Suite 100
Winston-Salem, NC 27101
-Provide name and age as of April 30, 2014
-Home address and county of residence
-Statement that you are a legal NC resident
-Email/phone number
-Name of potential beneficiary/relationship
Enrollment Forms and Other Information
• Online
CFNC.org/NC529
• E-mail
Savings@CFNC.org
• Toll free Number 800-600-3453
• Raleigh Number 919-828-4904
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.