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

Manulife College SavingsThe Multi-Managed Way to Save For College

Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.com

Bailey & Beatty Financial Services


College Savings Planning

Paul & Bo Beatty

June 2nd, 2003

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.

Securities and Advisory Services offered through Commonwealth Financial Network, Member NASD, SIPC, a Registered Investment Advisor




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.

Price Tag for a College Education

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2002 2020

Private Public




What savings options are available?

Benefits of 529 savings plans

Manulife College Savings

Getting started

Agenda




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




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.




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




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.




Generational Gifting

ChildChild$110K$110K








Son & WifeSon & Wife Son & WifeSon & WifeDaughter & HusbandDaughter & Husband

$5,000,000 taxable estate:$5,000,000 taxable estate:Grandpa & GrandmaGrandpa & Grandma

Grandparents: Remove $880,000 from estateGrandparents: Remove $880,000 from estate

Each child has an account starting with $110,000!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.




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.




Educational Savings Vehicles

529 SavingsPlans

UGMA/UTMA

Coverdell Education Savings Account

Taxable Accounts

Tax Deferral Yes No

Yes, tax free if used for qualified expenses

No

Maximum AnnualContribution

Up to $250,000 Lifetime Plan

Limit depending

on plan

None $2,000 annually None

Income Qualification

None None AGI Limits Apply None

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




Educational Savings Vehicles

529 SavingsPlans

UGMA/UTMA

Coverdell Education Savings

Accounts

Taxable Accounts

Control of Withdrawals Account Holder

Custodian, until child

reaches age of majority

(Can vary by state)

Account Owner Account Owner

Ability to Change Beneficiary

Yes No Yes Not Applicable

Estate Planning Benefits

Assets are transferred out of the

estate


estate


estate

Assets remain part of the

estate


Phone: 203-743-5040 e-mail: [email protected] www.baileybeatty.comBailey & Beatty Financial Services

What will your legacy be?

Bailey & Beatty Financial Services is here to help you

plan and implement your College Savings.

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

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