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T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E PowerPoint Presentation
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T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E

T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E

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T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E

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  1. Welcome to our Presentation on Michigan’s 529 College Savings Plans • T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E

  2. Cost of College • Additional costs may include registration fees, text book and supplies, mandatory fees, transportation, parking passes, athletic fees, recreational facilities pass, computer lab costs, legal services, health service fee, etc… • Reflects In-state Tuition Rates for Michigan Residents. • *Estimating an annual 6% inflation factor per year for 18 years. College costs were cited from college websites www.svsu.edu, www.umich.edu, www.alma.edu, as of January 2014.

  3. A Wise Investment An individual with a bachelor’s degree can make over $800,000 more over a working life time than someone with a high school degree. Average annual income data is based on the U.S Bureau of Labor Statistics, Current Population Survey updated as of January 2013. * A doctorate or professional degree is the highest degree offered in a field of study, be it medicine, law, engineering, etc.

  4. Don’t do it with Debt • Average cumulative student debt is $24,700 • Among graduating 4 year undergraduate students who applied for federal student aid, 65.6% borrowed to pay for their education • 61.5% of Financial Aid is in the form of Federal loans • National Center for Education Statistics, October 2012

  5. Michigan’s Section 529 Plans First 529 Prepaid Tuition Plan implemented in 1988 Over $1 billion in assets & 101,565 Contracts (Feb. 2014) Actuarial Review & Annual Audit 529 Direct-sold College Savings Plan started in 2000 Over $3.5 billion in assets and 208,520 accounts (Feb. 2014) Treasury Review & Annual Audit 529 Advisor-sold College Savings Plan started in 2009 $272 million in assets & 25,770 accounts (Feb. 2014) Treasury Review & Annual Audit

  6. MET & MESP Tax Benefits • Michigan income tax deduction (annual) • MET - Total Contract Price • MESP - $5,000 (single) or $10,000 (joint)* • Tax Deferred Earnings/Growth potential. • Tax Free Withdrawals if used for qualified expenses. • Treated as completed gifts for federal estate and gift tax purposes. Consult your Tax Advisor. *Michigan taxpayers are eligible to receive a Michigan income tax deduction of up to $10,000 a year for married couples filing jointly and $5,000 a year for individuals filing single on contributions made to MESP, less any Qualified Withdrawals made during the same tax year. Amounts transferred from another 529 college savings plan are not eligible for the Michigan income tax deduction.

  7. What is MET? • Michigan’s 529 Prepaid Tuition Plan • Designed to allow parents, grandparents and others to prepay college tuition • Purchasing a contract for tomorrow’s education at today’s cost • Purchase credit hours • Provides in-state tuition and mandatory fees at any Michigan public college/university • Transfer of risk • Funds pooled together for investment purposes • Secured by the assets of the Trust

  8. Full Benefits - in-state rate Limited Benefits - 105% WAT 105% Weighted Average Tuition = $12,747 UM-AA (26 cr.) - MTU (25 cr.) - MSU (27 cr.)* Community College - in-district rate Contract constitutes a completed gift for benefit of a minor - age 18/h.s. graduate *As of Fall 2014 Contract Options

  9. Purchasing a Contract • One Purchaser per contract • One Beneficiary per contract • Beneficiary must be Michigan resident • No age restrictions • Name a Contingent Contract Purchaser • Transferable to an immediate family member (no residency requirement) • Low fee program – 40 basis points

  10. Flexible Purchase Options • Prepay by Semesters (1/2 years) • Maximum 10 Semesters (5 years) per beneficiary • See Price Chart on page 20 • Flexibility • Multiple contracts per beneficiary • Mix contract options • Now or later

  11. Payment Options • Lump Sum • Monthly Purchase - Use Payroll Deduction, ACH, Coupons • 1st monthly purchase due Feb. 25, May 25, Sept. 25, or Oct. 25 • No obligation to continue monthly purchases • Early payoff discount

  12. Portable • Use Your MET Contract: • In-state tuition at Michigan public colleges and universities • Use at Out-of-State colleges and Michigan independent colleges • With partial scholarships • To transfer among colleges • Towards a graduate degree (AP credits) • Within 15 years

  13. Refund Amounts for Fall 2014 Reason for not attending Mich. Public college: (Refund amounts for Full Benefits Contracts) Michigan private college Weighted Average Tuition - $12,140 Out-of-state institution or full scholarship Average Tuition - $11,676 Death, disability, not attending or military Lowest Tuition - $9,680

  14. Qualified Institutions • Lowest tuition refund can be used at any certificate or degree granting institution that offers financial aid to their students • Go to U.S. Dept. of Education Web site: www.fafsa.ed.gov • Qualified Expenses*: tuition, fees, room, board, books, equipment required for enrollment *Earnings are taxed & 10% fed. excise tax on the earnings apply if not used for qualified higher ed expenses at a qualified institution.

  15. Withdrawing Funds Withdrawals for qualified expenses are exempt from federal and Michigan income taxes Submit Forms or Withdraw Online • Notice to Use MET Educational Benefits (form 3181) – Attending Mich. Public College or University • Notice to Terminate a MET Educational Benefits Contract (form 2773) – Attending Mich. Private, Out-of-State, Full Scholarship, Not Attending College, Death or Disability • To withdraw online visit www.SETwithMET.com and log into Customer Web Qualified Expenses

  16. How to Enroll • 2014 Contract Enrollment Period • December 10, 2013 thru September 30, 2014 • Read the Contract, then Enroll: • On line at www.SETwithMET.com • By Mail • Treasury Offices • Help Line: 1-800-MET-4-KID or (517) 335-4767

  17. What is MESP? With Flexibility in choosing your investment options With taxadvantages A Savings Plan

  18. TIAA-CREF Unique focus on education Over 90 years of investment experience Over $502 billion in combined assets under management* TIAA-CREF Tuition Financing, Inc. is an industry leader in managing section 529 plans * As of December 31, 2012

  19. Account Owner Account Owner • One account owner per account • Valid Social Security Number • U.S. address of record • Contingent account owner • No state residency required • Full control • Change beneficiaries Beneficiary • One beneficiary per account • Need a valid social security number to start • No state residency required • No age restrictions • No time restrictions • Beneficiary can be changed to another eligible family member of the original beneficiary Beneficiary

  20. Opening An Account • Open an account with as little as $25 per investment option • Contribute as little as $15 per investment option using payroll deduction • How can you make a contribution? • Payroll deduction • Bank account deduction (ACP) • By check • Gifts from family members and friends

  21. Investment Options Investment Options can vary in risk and objective. Please read the Disclosure Booklet prior to opening an account. • Conservative Age-Based Allocation Option • Moderate Age-Based Allocation Option • Aggressive Age-Based Allocation Option • Balanced Option • 100% Fixed-Income Option • U.S. Equity Index Option • Global Equity Index Option • International Equity Index Option • Principal Plus Interest Option

  22. Investment Options – Age Based

  23. Investment Options • Underlying investments are TIAA-CREF Institutional Mutual Funds. Investments in foreign securities are subject to special risks, including currency fluctuation and political and economic instability. These investment risks may be magnified in emerging markets. • Investment Performance is not guaranteed. Risk level - Aggressive The Global Equity Index Option seeks to provide a favorable long-term total return, mainly from capital appreciation, by investing in equity mutual funds. Because of the high exposure to domestic and foreign equities, and the corresponding high degree of risk, this Option may be appropriate for you if you already have substantial college savings from less volatile investments (e.g., fixed-income investments) or you have a long time until college and can tolerate a higher level of risk. Risk level - Moderate The Balanced Option seeks to provide a favorable long-term total return by investing in a balanced mix of equity and fixed-income mutual funds. Because of the high exposure to domestic and foreign equities, and the corresponding degree of risk, this option may be appropriate for you if you can tolerate a degree of volatility in exchange for potentially higher returns over time.

  24. InvestmentOptions Risk level – Conservative The 100% Fixed-Income Option seeks to provide preservation of capital along with a moderate rate of return through a diversified mix of fixed-income investments. This Option may be appropriate for you if you have a medium to short investment time horizon and can tolerate a moderate level of risk. Risk level – Aggressive This investment option seeks to provide a favorable long-term total return, mainly through capital appreciation by investing in international and emerging markets index funds. • Underlying investments are TIAA-CREF Institutional Mutual Funds. Investments in foreign securities are subject to special risks, including currency fluctuation and political and economic instability. These investment risks may be magnified in emerging markets. • Investment Performance is not guaranteed.

  25. Investment Options • Underlying investments are TIAA-CREF Institutional Mutual Funds. Investments in foreign securities are subject to special risks, including currency fluctuation and political and economic instability. These investment risks may be magnified in emerging markets. • Investment performance is not guaranteed. Risk level – Aggressive The U.S. Equity Option invests 100% of its assets in one “index fund,” meaning that the fund attempts to track a benchmark index.

  26. Choosing The Best Investment Option • Choose a combination of options • Allocate new contributions to any option • Transfer between options once per calendar year for the same beneficiary or upon a change of beneficiary *Note: The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating all the information, the ultimate decision is up to the account owner.

  27. Low Cost Program More of your investment can go toward education expenses, notaccount administration • Just $1.80-2.80 per $1,000 annually (low 0.18-0.28% fee) • Management fee is used to cover the cost of investment management and administration services • No other fees or charges will be applied to your account

  28. Qualified Institution Any qualified institution in the nation and some abroad • Private or Public • College, University, or Community College • Trade or Career School • For any type of degree or certificate program www.fafsa.ed.gov *Note: The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating all the information, the ultimate decision is up to the account owner.

  29. Qualified Expenses Withdrawals for qualified expenses are exempt from federal and Michigan income taxes Qualified Expenses • Tuition and Fees • Books • Certain Room & Board* • Required Supplies Withdrawing is easy • Online Withdrawals • Download or request a withdrawal request form • KEEP RECEIPTS FOR YOUR RECORDS *Enrollment must be at least half-time with expenses eligible up to a specified level.

  30. Similarities and Differences SIMILARITIES • Both are Section 529 qualified tuition programs • State income tax deductions • Earnings are tax exempt for qualified withdrawals • Low Cost, No Commissions • Transferable to immediate family members • Fund with after tax dollars • Contribute with payroll deduction, ACH or coupons • Can be used separately or together ($235,000 max.) • Recognized as owner’s asset for financial aid purposes. Consult your tax advisor. • Rollovers accepted from other 529 programs MET • Prepay tuition with three contract options • Purchase credit hours, in semester increments, at today's prices for future use • Best benefit at Michigan public institutions for tuition and mandatory fees • Refund amounts payable to in-state private or out-of-state institutions • Purchase for Michigan children – no age limit • 15 years to use or refund • Forget about tuition increases, you are locked in MESP • Investment account with nine investment options • Use at any "eligible educational institution" • Contribute to all qualified higher education expenses • Open an investment savings account with as little as $25 • One change in investment strategy every twelve months • No age or time limit to use funds

  31. Website Resources • Gift Templates • Calculators • Webcasts • Forms • Promotions www.SETwithMET.com www.MIsaves.com

  32. www.SETwithMET.com 800-MET-4-KID (517) 335-4767 8 AM to 5 PM www.MIsaves.com 877-861-MESP 8 AM to 8 PM For More Information Be sure to read the MET Contract Enrollment Booklet and/or the MESP Program Disclosure Booklet before investing, which are available on-line or from the Programs at the numbers listed above.

  33. Resources • www.SETwithMET.com • www.MIsaves.com • www.collegeboard.com • www.collegesavings.org • www.savingforcollege.com • www.finaid.com • www.fafsa.ed.gov

  34. Thank you for joining us T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E

  35. MESP Disclosures • The Michigan Education Trust (MET) is administered and managed by the Michigan Department of Treasury. The Michigan Education Savings Program (MESP) is administered by the Michigan Department of Treasury. TIAA-CREF Tuition Financing, Inc. is the Program Manager. • Before investing in a 529 plan, consider whether the state where you or your Beneficiary resides has a 529 plan that offers favorable state tax benefits that are available if you invest in that state’s 529 plan. • Consider the investment objectives, risks, charges and expenses carefully before investing in MESP. Please visit www.MIsaves.com for a Disclosure Booklet containing this and other information. Read it carefully. Investments in the Program are neither insured nor guaranteed and there is the risk of investment loss. • The tax information 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. TIAA-CREF Tuition Financing, Inc. , Program Manager C8291