Connecticut Higher Education Trust (CHET) Connecticut s 529 College Savings Plan

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1 Connecticut Higher Education Trust (CHET) Connecticut s 529 College Savings Plan ENROLLMENT KIT Denise L. Nappier Treasurer

2 Overview of CHET 2 How CHET works 3 4 Tax advantages 5 Special CHET programs 6 CHET s 14 investment options 7 8 Account forms 9 We all want to give our children or other loved ones a good education and a brighter future. Higher education whether a four-year college, a community college or a technical school offers students a chance to open their minds, develop their talents, acquire knowledge and hone their skills. Higher education can also translate into stronger earning power and steadier employment over the course of one s career.

3 Overview of CHET: Connecticut s 529 College Savings Plan The Connecticut Higher Education Trust (CHET) is Connecticut s 529 college savings plan, offered by the Office of Connecticut State Treasurer Denise L. Nappier. CHET is managed by TIAA-CREF Tuition Financing, Inc., a national leader in 529 college savings plan management. Families in Connecticut are fortunate to have a plan that offers unique features, particularly a Connecticut state income-tax deduction on contributions. WHAT IS A 529 PLAN? The number 529 refers to the federal tax code section that provides federal tax advantages for qualified tuition programs. Like a 401(k) plan, also named after a federal tax code section, which helps you save for retirement, a 529 plan helps you save for a college education. TODAY S CHALLENGE: HELPING TO REDUCE THE NEXT GENERATION S COLLEGE DEBT College graduates in the United States are now completing their education with an average debt of $27,300 (The College Board, Annual Survey of Colleges, 2001 to 2016). Starting a career with this amount of debt can limit your child s retirement savings, delay their first home purchase or even impact their ability to provide for their own families. CHET provides you with the potential to contribute to your family s financial well-being. While some may find the very thought of saving for higher education overwhelming, remember that relatives, especially grandparents, may want to help out as well. You can also strive to fund just a portion of your child s education with the understanding that every dollar invested is potentially one less dollar borrowed later. Your child s brighter future can start today. CHECK CHET OUT! n 2

4 How CHET works WHO CAN PARTICIPATE? Anyone can open a CHET account for anyone else parents, grandparents, friends or relatives at any income level are all eligible to set up an account. You can even open an account for yourself if you want to go back to school later in life. Plus, more than one person can contribute to a single account. WEBSITE TIP: HOW MUCH WILL COLLEGE COST? Start your college plan by calculating your savings needs. Check out our College Savings Planner at aboutchet.com. The calculator projects hypothetical college costs in your child s time frame and calculates how much you may need to save on a regular basis to help meet those costs. The Planner also includes a college cost database look-up with approximately 3,800 colleges. MINIMUM CONTRIBUTION Open an account with as little as $25 per investment option. MAXIMUM ACCOUNT BALANCE There is a high lifetime maximum account balance limit of $300,000 per beneficiary for CHET. Your account may continue to grow beyond the maximum account balance limit, but no further contributions would be allowed. REMEMBER: Starting early gives your money more opportunity to grow. Once your child is nine years old, he or she is already halfway to college age! A MEANINGFUL CONTRIBUTION IS SIMPLER THAN YOU THINK. Sharing today can make all the difference in your child s future. $100,000 $92,541 80,000 60,000 $52,493 $53,612 40,000 20,000 $24,528 $15,844 $11,502 $31,374 $20,814 $34, YEAR TOTAL ACCUMULATION 12-YEAR TOTAL ACCUMULATION 18-YEAR TOTAL ACCUMULATION MONTHLY CONTRIBUTION = $200 MONTHLY CONTRIBUTION = $100 MONTHLY CONTRIBUTION = $50 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, does not reflect actual performance or predict future results of CHET, and does not reflect the benefits of any Connecticut or federal tax benefits. Investments in the Plan are neither insured nor guaranteed, and there is the risk of investment loss. Account values will vary with general market conditions. 3 n WE RE READY TO HELP

5 CHET is easy and flexible YOU CAN USE CHET FUNDS: n At thousands of eligible educational institutions nationwide and abroad including community colleges, trade schools and many post-secondary programs. n For tuition, fees, books, a computer and equipment required for enrollment or attendance at an eligible educational institution. n For certain room and board expenses. CONTROL OF THE MONEY As owner of the account: n You maintain complete control of your account regardless of the child s (beneficiary s) age. n You make all the decisions for the account, from selecting the CHET investment options to making withdrawals from your account. n You can name a successor account owner, and you can transfer the ownership to another person. TRANSFER TO ANOTHER BENEFICIARY If your designated beneficiary decides not to attend college, or has other funding options, you may transfer funds in your account to certain eligible family members of the original beneficiary, including siblings, a spouse, first cousins even yourself. ROLLOVERS TO CHET You can roll over the money from another 529 plan into your CHET account to take advantage of all the benefits of CHET. CHET makes the process easy, with a single form or through an experienced CHET college savings representative. Note: Transfers and rollovers 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 CHET is one of the lowest-cost 529 plans in the country. There are no application fees, sales or maintenance charges, just a total annual asset-based management fee. Low fees allow you the opportunity to put more of your money toward future college expenses. The annual asset-based management fee varies across each of the fourteen investment options, and there is no asset-based management fee on the Principal Plus Interest Portfolio. For more information, refer to the fee table in the enclosed disclosure booklet or the CHET website. WEBSITE TIP: WHAT YOU CAN DO ONLINE When you set up online access to your CHET account, you can: Access account information. Make contributions. Set up an Automatic Contribution Plan (ACP). Sign up for e-delivery of your statements and disclosure material. Request withdrawals online to your bank account on file, and even have funds sent directly to your beneficiary s school. Purchase a CHET Gift of College giftcard. Visit the CHET mobile optimized secure website to access account information and execute various transactions from your mobile devices. Join Connecticut s 529 online community by following CHET on and liking us on Facebook at facebook.com/chet529. CHECK CHET OUT! n 4

6 Tax advantages can boost your savings CONNECTICUT STATE INCOME TAX DEDUCTION Connecticut taxpayers are eligible to receive a state tax deduction of up to $10,000 per year for married couples filing jointly and $5,000 per year for single filers on contributions made to CHET. (Amounts transferred from another 529 college savings plan are not eligible for the Connecticut income-tax deduction.) FEDERAL AND STATE TAX-FREE GROWTH POTENTIAL AND WITHDRAWALS Any earnings in your CHET account grow tax-deferred over time, and withdrawals used to pay for qualified higher education expenses are free from federal and state income tax. ESTATE PLANNING BENEFIT Contributions to CHET may reduce the taxable value of your estate. For example, money placed in a child s or grandchild s CHET Account, together with all the other gifts you give that child in one year, may qualify for an annual federal gift tax exclusion of $14,000. Couples filing jointly can contribute up to $140,000 per child and take advantage of 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 own situation. 5 n WE RE READY TO HELP

7 Special CHET programs CHET BABY SCHOLARS The State of Connecticut passed legislation creating the CHET Baby Scholars program to encourage college savings for newborns and newly-adopted children. The State will provide a one-time contribution of $100 to families who open a CHET 529 college savings account by the child s first birthday or within the first year after adoption. Then, families who save at least $150 dollars in the first four years will receive an additional state match of $150 for a total state investment of $250. Visit aboutchet.com/babyscholars to learn more. PARENTS AUNTS & UNCLES EDUCATION GRANDPARENTS TURN YOUR CHILD S GIFTS INTO CONTRIBUTIONS It s customary for relatives and friends to give your child gifts on birthdays and other special occasions. So tell them you ve opened a CHET account, and ask if they would be willing to make a contribution toward your child s college education or open an account instead of gifting the typical toy. Go to aboutchet.com to learn more about gifting with CHET. CHET ADVANCE SCHOLARSHIP The CHET Advance Scholarship is an annual program offered by the Connecticut State Treasurer s Office to help Connecticut students pay for college. Visit to learn more about the scholarship. CHECK CHET OUT! n 6

8 CHET offers fourteen different investment options A WORD ABOUT RISK Each investment option has its own risks. For example, international investing poses special risks currency, political, social and economic. Investments in growth stocks may be more volatile than other securities. Fixed-income investing entails 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 during that period. It s also possible to lose all or part of the value of your account. You can invest contributions in any one or a combination of CHET s fourteen investment options. These options vary in their investment strategy and degree of risk, allowing you to select an option or combination of options that fits your needs. Three age-based investment options An age-based investment is a professionally managed option that uses the age of the beneficiary to determine the appropriate investment allocation. The asset allocation of these options adjusts automatically over time, investing more aggressively when the child (the beneficiary) is young and more conservatively as the child gets older. CHET offers three age-based tracks, called the Aggressive-, Moderateand Conservative-managed allocation options. Shown below are the allocations for the Moderate track. MODERATE-MANAGED ALLOCATION OPTION 0 4 YEARS 5 8 YEARS 9 10 YEARS YEARS YEARS 15 YEARS 16 YEARS 17 YEARS 18 And Over Stocks Bonds Cash 7 n WE RE READY TO HELP

9 Eleven single-focused (static) investment options ACTIVELY MANAGED OPTIONS CHET offers six actively managed options. An actively managed fund is different from a passively managed index-based fund in that it is not managed to track its benchmark index, but rather managed pursuant to the investment style and strategy of its investment manager. This means that the performance of an actively managed fund can vary from that of its benchmark index in either a positive or negative direction. INDEX-BASED OPTIONS CHET offers four index-based investment options which seek to provide a stable return. The indexbased options are low fee and invest primarily in underlying funds that are index funds. An index fund is managed to track a specific securities index that the fund uses as a benchmark. INTERNATIONAL EQUITY INDEX OPTION GLOBAL EQUITY INDEX OPTION GLOBAL TACTICAL ASSET ALLOCATION OPTION ACTIVE GLOBAL EQUITY OPTION 100% International equities 43% Domestic equities 44% International equities 13% Emerging markets equities 100% GMO Benchmark-free allocation series fund 50% Domestic equities 50% International equities U.S. EQUITY INDEX OPTION INDEX FIXED-INCOME OPTION HIGH EQUITY BALANCED OPTION ACTIVE FIXED-INCOME OPTION 100% Domestic equities 100% Bonds 80% Equities 60% Bonds 4% Inflation-linked bonds SOCIAL CHOICE 80% Domestic equities 20% International equities MONEY MARKET PRINCIPAL PLUS INTEREST OPTION The Principal Plus Interest Option is the most conservative option, seeks to preserve capital and provide a stable return. The minimum effective annual interest rate will be neither less than 1% nor greater than 3% at any time. The current effective annual interest rate applicable to the funding agreement is posted on the CHET website at aboutchet.com. 100% Equities 100% Money market Refer to the enclosed disclosure booklet for details about each investment option and its allocations. CHECK CHET OUT! n 8

10 Get started today saving for college with CHET Remember the more you invest and the earlier you start, the more opportunity your money has to grow. n Calculate how much you need to save. STILL HAVE QUESTIONS? Call toll free: One of our college savings plan specialists can answer your questions. Go to aboutchet.com to schedule a one-on-one meeting with one of our Connecticutbased college saving consultants. Review the enclosed disclosure booklet. n Set your goals. n Set up recurring contributions from your checking or savings account to your 529 plan. n Contribute through payroll direct deposit, if your employer offers it. WHAT YOU WILL NEED n The beneficiary s, account owner s and successor account owner s* date of birth, social security number or federal taxpayer identification number. n Select the investment option(s) that match your investment objectives. * A successor account owner is the individual who will take over the account in the event of the account owner s death. Designation of a successor account owner is optional. 9 n WE RE READY TO HELP

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12 READY TO ENROLL? TWO EASY WAYS: 1. Enroll online at aboutchet.com. 2. Fill out and return the enclosed application.

13 The CHET direct-sold plan is administered by the Office of Connecticut State Treasurer Denise L. Nappier. TIAA-CREF Tuition Financing, Inc., Program Manager. TIAA-CREF Individual & Institutional Services, LLC, member FINRA, distributor and underwriter. To learn more about the Connecticut Higher Education Trust, its investment objectives, tax benefits, risks, and costs please see the Disclosure Booklet at aboutchet.com. Read it carefully. Check with your home state to learn if it offers tax or other benefits for investing in its own 529 plan. A Connecticut income tax deduction on contributions made to CHET is available to Connecticut taxpayers. If the money isn t used for qualified higher education expenses, a 10% penalty tax on earnings (as well as federal and state income taxes) may apply. Taxpayers should seek advice from an independent tax advisor based on their own particular circumstances. Investments in the Plan are neither insured nor guaranteed, and there is the risk of investment loss. The CHET social media sites are managed by the Connecticut State Treasurer s Office. Neither TIAA-CREF Tuition Financing, Inc., nor its affiliates, are responsible for the content found on any external references or website links cited herein. Denise L. Nappier Treasurer A12505: 8/17