Six ways to reach college savings goals with a 529 plan

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1 ON COURSE TO COLLEGE Six ways to reach college savings goals with a 59 plan There are six steps families can take to increase savings, reduce taxes and accumulate more for a child s future. Look inside to see what they are and how they can help you get on course to college. INVESTMENTS ARE NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

2 3 4 5 Choose the right college savings plan 6 Choose the right college savings plan A tax-free 59 plan can grow faster than taxable accounts earning the exact same investment returns to help you accumulate more for college. Investment growth over 8 years Total investment Investment growth Taxable account Tax-free 59 plan $65,800 $03,666 $5,477 more with 59 plan $65,800 $9,43 Earnings on non-qualified withdrawals may be subject to federal income tax and a 0% federal penalty tax, as well as state and local income taxes. J.P. Morgan Asset Management. Illustration assumes an initial $,000 investment and monthly investments of $300 for 8 years. Chart also assumes an annual investment return of 6% and a federal tax rate of 8%. Investment losses could affect the relative tax-deferred investing advantage. This hypothetical illustration is not indicative of any specific investment and does not reflect the impact of fees or expenses. Each investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the illustration may not reflect these factors. These figures do not reflect any management fees or expenses that would be paid by a 59 plan participant. Such costs would lower performance. Shown for illustrative purposes only. Past performance is no guarantee of future results.

3 Start early and save regularly Start early and save regularly Make college savings a priority by opening 59 accounts early and arranging for automatic contributions from your bank account or paycheck each month. If you start saving $500 per month when a child is born, you ll earn $84,4 more than if you wait until age 6. J.P. Morgan Asset Management. This hypothetical example illustrates the future values of $500 monthly investments for different time periods. It also assumes an annual investment return of 6%. Investment losses could affect the relative tax-deferred investing advantage. This hypothetical illustration is not indicative of any specific investment and does not reflect the impact of fees or expenses. Such costs would lower performance. Each investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the illustration may not reflect these factors. A plan of regular investment cannot assure a profit or protect against a loss in a declining market. Shown for illustrative purposes only. Past performance is no guarantee of future results.

4 Know what to expect from financial aid Know what to expect from financial aid Expecting more financial aid than you are likely to receive can cause you to save too little and borrow too much. Percent of students getting a free ride Percent of total college costs covered Grants % 0.3% Scholarships 6% Finaid.org. Based on full-time students at four-year public colleges. Sallie Mae, How America Pays for College, 06. Four-year public college costs.

5 3 4 Make 5 the most of special gift and estate tax benefits 6 4 Make the most of special gift and estate tax benefits Only 59 plans allow five years of tax-free gifts in a single year and all gifts and investment earnings grow outside the donor s taxable estate. Accelerated gifting: Larger college funds, smaller taxable estates Annual gift $4,000 per beneficiary ($8,000 from couples) Accelerated gift $70,000 per beneficiary ($40,000 from couples) No additional gifts can be made to the same beneficiary over a five-year period. If the donor does not survive the five years, a prorated portion of the gift is returned to the taxable estate. Be sure to discuss any gift tax implications with your tax advisor.

6 3 4 5 Invest in a diversified portfolio 6 5 Invest in a diversified portfolio Even in its worst 8-year period, a 50/50 mix of stocks and bonds outperformed tuition inflation that s the power of diversification. Average annual returns over 8-year rolling periods, Average annual tuition inflation 7.0% 7.9% 0.7% 4.8% 6% Worst Average Best 6% Barclays Capital, FactSet, Robert Shiller, Strategas/Ibbotson, Federal Reserve, BLS, J.P. Morgan Asset Management. Rolling returns shown are based on calendar-year returns from 979 to 05. Data are as of /3/5. Past performance is not indicative of future results. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

7 Don t use retirement funds for college 6 Don t use retirement funds for college Paying for college with IRAs and 40(k)s can result in smaller retirement accounts, lower financial aid packages and higher taxes. How college withdrawals can jeopardize retirement security $5,000 $80,78 College withdrawal Reduction in retirement account J.P. Morgan Asset Management. This illustration assumes that assets would have remained in a tax-advantaged retirement account instead of being withdrawn for college, earning 6% annual investment returns for 0 years. This example does not represent the performance of any particular investment. Different assumptions will result in outcomes different from this example. Your results may be more or less than the figures shown. Investment losses could affect the relative tax-deferred investing advantage. Each investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the illustration may not reflect these factors. These figures do not reflect any management fees or expenses. Such costs would lower performance. Shown for illustrative purposes only. Past performance is no guarantee of future results.

8 Know what to expect from financial aid Start early and save regularly APPENDIX SAVING & INVESTING COLLEGE COSTS A comprehensive guide to saving and investing FINANCIAL AID College Planning Essentials INVESTMENTS ARE NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE 4 Make the most of special gift and estate tax benefits 5 Invest in a diversified portfolio 6 COLLEGE MATTERS Choose the right college savings plan 3 Don t use retirement funds for college Visit to learn more These six ideas come from College Planning Essentials, an informative guide to tuition costs, financial aid and investing strategies. To see the full guide and other college planning insights, please visit or consult your financial advisor.

9 INVESTMENTS ARE NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE Before you invest, consider whether your or the beneficiary s home state offers any state tax or other benefits that are only available for investments in that state s qualified tuition program. The Comptroller of the State of New York and the New York State Higher Education Services Corporation are the Program Administrators and are responsible for implementing and administering the Advisor-Guided Plan. Neither the State of New York nor its agencies insures accounts or guarantees the principal deposited therein or any investment returns on any amount or investment portfolio. Ascensus Broker Dealer Services, Inc. and Ascensus Investment Advisors, LLC serve as Program Manager and Recordkeeping and Servicing Agent, respectively, and are responsible for day-to-day operations, including effecting transactions. J.P. Morgan Investment Management Inc. serves as the Investment Manager. J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. JPMorgan Distribution Services, Inc. markets and distributes the Advisor- Guided Plan. JPMorgan Distribution Services, Inc. is a member of FINRA/SIPC. New York s 59 College Savings Program includes two separate 59 plans. The Advisor-Guided Plan is sold exclusively through financial advisors who have entered into Advisor-Guided Plan selling agreements with JPMorgan Distribution Services, Inc. You may also participate in the Direct Plan, which is sold directly by the Program and offers lower fees. However, the investment options available under the Advisor-Guided Plan are not available under the Direct Plan. The fees and expenses of the Advisor-Guided Plan include compensation to the financial advisor. Be sure to understand the options available before making an investment decision. For more information about New York s 59 Advisor-Guided College Savings Program, you may contact your financial advisor or obtain an Advisor-Guided Plan Disclosure Booklet and Tuition Savings Agreement at or by calling This document includes investment objectives, risks, charges, expenses, and other information. You should read and consider it carefully before investing. The Program Administrators, the Program Manager and JPMorgan Distribution Services, Inc., and their respective affiliates do not provide legal or tax advice. This information is provided for general educational purposes only. This is not to be considered legal or tax advice. Investors should consult with their legal or tax advisors for personalized assistance, including information regarding any specific state law requirements. October BRO-OCTC