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Manulife College Savings The Multi-Managed Way to Save For College

Manulife College Savings The Multi-Managed Way to Save For College. College Savings Planning. Paul & Bo Beatty June 2 nd , 2003. Securities and Advisory Services offered through Commonwealth Financial Network, Member NASD, SIPC, a Registered Investment Advisor.

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Manulife College Savings The Multi-Managed Way to Save For College

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  1. Manulife College Savings The Multi-Managed Way to Save For College College Savings Planning Paul & Bo Beatty June 2nd, 2003 Securities and Advisory Services offered through Commonwealth Financial Network, Member NASD, SIPC, a Registered Investment Advisor Although many of the topics presented may also involve tax, legal, accounting, or other issues,neither The Manufacturers Life Insurance Company (U.S.A.), Manulife Financial Securities LLC nor any of its agents, employees, or registered representatives, are in the business of offering such advice. Individuals interested in these topics should consult with their own professional advisors to examine tax, legal, accounting, or financial aspects of these topics.

  2. Price Tag for a College Education Projected Cost for a Four-Year College Education Source: Trends in College Pricing, The College Board, 2001. Average costs included 4 years of tuition and fees as well as room and board for the 2001-2002 school year. Projected costs assume a 5% inflation rate per year.

  3. Agenda • What savings options are available? • Benefits of 529 savings plans • Manulife College Savings • Getting started

  4. 529 Savings Plans • College Savings Plans • Cover tuition and certain other expenses including room and board • Plan assets may be used for any eligible educational institution • Assets generally invested in portfolios holding mutual funds • Offer different investment options

  5. 529 Savings Plan Benefits • Any earnings are tax-deferred • Qualified withdrawals are federal income tax-free* • Account Holder maintains control • Qualified or non-qualified withdrawals • Ability to change beneficiaries • Portable benefits *Tax provisions allowing for federal income tax-free withdrawals for qualified expenses will expire 12/31/10 unless extended. State tax laws and treatment will vary. If your state offers a plan you may want to consider what, if any, potential state income tax benefits it may offer. Non-qualified distributions of earnings will be subject to income tax and a 10% federal penalty tax. Please consult your financial consultant for more information.

  6. 529 Savings Plan Benefits • No income limitations • No age limitations • Choice of portfolios • Based on time horizon of when the student will enroll in college • Allocation based on risk tolerance • Individual fund options

  7. The Power of Gifting • Estate and gift tax benefits • Five years worth of gifting in one year* • Allows $55,000 to be gifted in one year by an individual or $110,000 if married filing jointly • Money is removed from donor’s estate • Account Holder maintains control *If donor elects that the gift be treated as having accrued over a five-year period, donor may make single gift of up to $55,000 without triggering a gift tax. If additional gifts are made to the same beneficiary during this five-year period, a gift tax may apply.

  8. Daughter & Husband Son & Wife Son & Wife Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Child $110K Generational Gifting $5,000,000 taxable estate: Grandpa & Grandma Grandparents: Remove $880,000 from estate Each child has an account starting with $110,000! *Donor must elect that the gift be treated as accruing over a five-year period. If additional gifts are made to the same beneficiary during this five-year period, a gift tax may apply.

  9. A Gift from Uncle Sam • Investing in a 529 is better • Qualified withdrawals are federal income tax free* • Ability to do a tax free transfer from one plan to another without changing beneficiaries • Members of the family now include first cousins of the beneficiary • Room and board allowances increased for off-campus living *Tax provisions allowing for federal income tax-free withdrawals for qualified expenses will expire 12/31/10 unless extended. State tax laws and treatment will vary. If your state offers a plan you may want to consider what, if any, potential state income tax benefits it may offer. Non-qualified distributions of earnings will be subject to income tax and a 10% federal penalty tax. Please consult your financial consultant for more information.

  10. Educational Savings Vehicles *$110,000 can be contributed per beneficiary (married filing jointly) within a 5 year period without triggering gift taxes.

  11. Educational Savings Vehicles

  12. What will your legacy be?Bailey & Beatty Financial Services is here to help you plan and implement your College Savings.

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