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State Farm® College Savings Plan 529
What Is The State Farm College Savings Plan?
The State Farm College Savings Plan, sponsored by the state of Nebraska, is a qualified tuition plan operated according to section 529 of the Internal Revenue Code established in 1996. Our goal is to provide a simple, affordable, and convenient plan to help families set aside funds for future college costs.
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Professionally Managed, Flexible Investment Options
Maybe you want to help make sure your preschooler will be able to attend college. Or maybe youre saving for your own college tuition not far down the road. Thats why The State Farm College Savings Plan offers a variety of investment portfolios for different needs. You can choose whats right for you with five enrollment-based portfolios and four static portfolios managed by OFI Private Investments Inc. (OFIPI), a subsidiary of OppenheimerFunds, Inc. And should your investment objectives change, you can transfer to another State Farm College Savings Plan portfolio. Under the federal tax rules governing 529 plans, you can reallocate your investments once per calendar year or when you change the account's beneficiary.
Enrollment Based Portfolios
Your funds are placed in one of five portfolios whose allocations are based on the number of years until the beneficiary is expected to attend college. The portfolios automatically become more conservative as the first year of college approaches.
Our four static portfolios give you more control over how your savings are invested. Thats because unlike investing in our enrollment-based portfolios, you choose the static portfolio, or portfolios, youd like to invest in. And since our static portfolios dont automatically invest more conservatively over time, you can change your portfolio selections as your needs change. Under the federal tax rules governing 529 plans, you can reallocate your investments once per calendar year or when you change the account's beneficiary.
All assets within this portfolio are invested in equity funds. It is most appropriate for investors with a long investment time horizon and a high risk tolerance.
Moderate Growth Portfolio
This portfolio provides a mix of equity and fixed-income investments. It is most appropriate for investors with a medium to long investment time horizon and moderate risk tolerance.
This portfolio provides a more conservative mix of equity and fixed-income investments. Investors with a short to medium investment time horizon and a lower risk tolerance may prefer this option.
Money Market Portfolio
This portfolio invests to seek current income and protection of principal. It is most appropriate for investors with a short investment time horizon and a low risk tolerance.
The plan is open to any individual (including a custodian under a States Uniform Gifts or Transfers to Minors Act) who has a valid Social Security number.
There are no state residency requirements or income restrictions.
You may make additional contributions at any time, provided that:
- The total amount of all contributions to all accounts maintained within the Nebraska Educational Savings Plan Trust for the same beneficiary may not exceed $360,000.
- No additional contributions may be made for the benefit of a particular beneficiary when the fair market value of all accounts maintained within the Nebraska Educational Savings Plan Trust for that beneficiary plus any current contribution exceed $360,000.
Individual contributions of up to $65,000 ($130,000 for married couples) per beneficiary are allowed in a single year with no federal gift tax.
- Your contributions to the plan are generally removed from your federal taxable estate, reducing its taxable value.
- You may make contributions of up to $65,000 per beneficiary in a single year without triggering a federal gift tax. Married couples may contribute $130,000 per beneficiary in a single year.
- You make after-tax contributions to the account, but you dont pay taxes as the account grows. And as long as withdrawals are used to pay for qualified higher education expenses such as tuition, books, supplies, fees, and certain room and board, your investment earnings are received free of federal income tax.
The availability of such tax or other benefits may depend on meeting certain requirements. Pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001, earnings must be used to pay for qualified higher education expenses to be federally tax free. The earnings portion of a non-qualified withdrawal will be subject to ordinary income tax at the recipient's marginal rate and subject to a 10 percent penalty.
Shares in your account may be redeemed to pay the beneficiarys tuition and fees and the cost of books, supplies, and equipment required for enrollment or attendance at an institution of higher education. Subject to certain limits, room and board expenses of a student enrolled on at least a half-time basis may also be paid.
Section 529 College Savings Plans are higher education savings plan trusts established under Section 529(b) of the Internal Revenue Code as qualified tuition programs. Through these plans, individuals may make investments for the purpose of accumulating savings for qualifying higher education costs of beneficiaries. The plans include interests in pooled investment funds under trusts established by states or local governmental entities, as well as higher education savings plan trusts established by states.
According to the Investment Company Institute (ICI), a 529 college savings plan is an investment program that allows participants to invest in a special account designated for qualified higher education expenses. In general, college savings plans offer a rate of return that depends on the performance of the plans investments. As such, the value of a college savings plan account may increase or decrease over time.
With a prepaid tuition plan, parents, grandparents, and others essentially lock in todays tuition rates, and the program will pay out future college tuition at any of the states eligible colleges or universities (or will make a payment to private and out-of-state institutions).
The first step toward enhancing your savings for college and higher education begins when you complete an account application and make an initial contribution establishing an account for a named beneficiary. Contributions to your account will be invested in shares of the portfolio or portfolios you choose after deducting any sales charges that may be applicable. When your beneficiary incurs higher education costs, shares may be redeemed from your account to pay the higher education costs for the beneficiary.
If the beneficiary of an account dies or becomes disabled, youll be entitled to receive the balance in your account. Investment earnings will be taxed at your ordinary income rate, but no federal penalty tax will be assessed, and the trust will not assess a contingent deferred sales charge. You may also transfer the balance tax free to an account for another beneficiary who is a qualified member of the family.
If your beneficiary elects not to pursue post-secondary education, you may either transfer the account balance to an account for another beneficiary who is a qualified member of the family or withdraw the principal and investment earnings in a non-qualified withdrawal.
The servicing agent will not knowingly accept contributions in excess of the applicable limit. If, however, its determined that contributions are made in excess of the applicable limit, the excess plus any earnings (or minus any loss) attributable to such excess will be promptly refunded and will be treated as a non-qualified withdrawal that may be subject to a 10 percent federal penalty tax, but no contingent deferred sales charge will be assessed by the servicing agent.
Contributions will be invested in the selected portfolio(s) with designated allocations that you choose. Under federal tax law, once a portfolio selection has been made, an account owner may only change how previous contributions (and any earnings thereon) have been allocated among the available portfolio options for all accounts for the same designated beneficiary once per calendar year or upon a change of the designated beneficiary.
The plan consists of nine investment portfolios four Static Portfolios and five Enrollment-Based Portfolios. The static portfolios and the enrollment-based portfolios each invest all of their assets in underlying OppenheimerFunds. The Oppenheimer investment portfolios are each a fund of funds that invest their assets in other underlying mutual funds managed by OFI Private Investments Inc. (OFIPI), a subsidiary of OppenheimerFunds, Inc. Each portfolio seeks to meet its investment objective by building a portfolio of investments that meet a target investment allocation between equity and fixed-income investments. Each portfolios performance depends on the investment performance of the underlying funds in which it invests. Therefore, the risks of investing in the portfolios are the same as the risks associated with an investment in the underlying investments.
The underlying investments in which each of the four static portfolios invests remains the same and doesnt change based on the age of the designated beneficiary. This helps provide control over how your savings are invested by allowing you to choose the portfolio(s) that work best for you. Should your needs or goals change, you are responsible for selecting a new portfolio (transfers are allowed once per calendar year).
The enrollment-based portfolios are a series of five investment portfolios that are designed to fit particular investment time horizons. Your contributions are invested in the underlying investments based on the anticipated time to college enrollment of the designated beneficiary. The portfolios automatically adjust over time and will typically be invested more heavily in equity investments when the designated beneficiary is younger and more heavily in fixed-income and money market investments as the designated beneficiary nears enrollment in college.
If you invest in the enrollment-based portfolios, OppenheimerFunds will reallocate your investments as the designated beneficiary nears enrollment. In this case, you will be asked to provide (on the enrollment application) your designated beneficiarys estimated year of enrollment in college. OppenheimerFunds will make the determination as to whether your investments are scheduled to move to the next portfolio on an annual basis. Thus, if you open an account in 2009 and indicate on your enrollment application that your designated beneficiary is expected to begin enrollment in 2014, OppenheimerFunds will reallocate your investments on a schedule that will have you invested in the College Now Portfolio before September 1, 2014. If you elect to invest in the enrollment-based portfolios for a designated beneficiary who is under age 18, and you dont provide an estimated time to enrollment, your initial investment will be made based on the assumption that enrollment will begin in the year in which the designated beneficiary turns 18 years of age.
Withdrawals from an account may be used to pay higher education costs for a designated beneficiary. These include tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible institution of higher education. They also include the reasonable costs of room and board for a designated beneficiary who is at least a half-time student. The cost of room and board qualifies only to the extent that it is not more than the greater of the following two amounts:
- The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
- The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.
You will need to contact the eligible educational institution for qualified room and board costs. Institutions of higher education generally include accredited, post-secondary educational institutions offering credit toward a bachelors degree, an associates degree, a graduate-level or professional degree, or another recognized post-secondary credential, including certain post-secondary vocational institutions. The institution must be eligible to participate in U.S. Department of Education student aid programs.
You may request a qualified withdrawal at any time and elect any of the following distribution options:
- The distribution may be deposited directly to your bank account.
- The distribution may be made in the form of a check payable to:
- The account owner,
- The designated beneficiary, or
- An eligible Institution of higher education for the benefit of (FBO) the designated beneficiary.
To request a qualified withdrawal from your account, the account owner must complete and submit a Withdrawal Request Form to his or her State Farm registered representative or to OppenheimerFunds at P.O. Box 173865, Denver, CO 80217-3865. A withdrawal can also be requested by calling The State Farm College Savings Plan at 1-800-321-7520.
There is no set date or age by which you must begin making withdrawals from your account.
Yes, but any such withdrawal will be a non-qualified withdrawal unless it is:
- A withdrawal by reason of the death (if paid to the designated beneficiarys estate) or disability (within the meaning of Section 72(m)(7) of the Code) of the designated beneficiary of the account;
- A withdrawal by reason of the designated beneficiarys receipt of a qualified scholarship (to the extent of the scholarship amount);
- A qualified rollover distribution.
The earnings portion of a non-qualified withdrawal is treated as income to the distributee and is subject to federal and applicable state income tax as well as an additional 10 percent federal tax on earnings. In addition, any applicable contingent deferred sales charges will be assessed by the servicing agent.
The eligibility of the beneficiary for financial aid may depend upon the circumstances of the beneficiarys family at the time the beneficiary enrolls in an institution of higher education, as well as on the policies of the governmental agencies, school, or private organizations to which the beneficiary and/or the beneficiarys family applies for financial assistance. These policies vary at different institutions and can change over time. Therefore, no person or entity can say with certainty how the federal or state aid programs, or the school to which the beneficiary applies, will treat your account. However, financial aid programs administered by agencies of the state of Nebraska wont take your account balance into consideration, except as may be otherwise provided by federal law.
If the beneficiary of your account receives a scholarship or other financial aid, the beneficiary may no longer require all of the funds in the account. In that case, IRS Publication 970 indicates that you may withdraw funds from your account up to the amount of such scholarship or other financial aid. The earnings portions of the withdrawal will be included in your ordinary income, but no federal penalty tax will be assessed, and the trust will not assess a contingent deferred sales charge if the scholarship or aid is a scholarship, allowance, or payment described in section 25A(g)(2) of the Code.
You may also transfer the amount withdrawn in a qualified rollover distribution, in which case no amount of the withdrawal will be included in your income.
Before investing, consider the investment objectives, risks, fees and expenses associated with The State Farm College Savings Plan before investing. Contact State Farm VP Management Corp (1-800-447-4930) for an Enrollment Handbook and Participation Agreement containing this and other information. Read it carefully.
An investor should consider, before investing, whether the investors or designated beneficiarys home state offers any state tax or other benefits that are only available for investments in such states qualified tuition program.
Investing involves risk, including potential for loss.
An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Enrollment Based Portfolios are similar to target date funds in that their investment objectives are adjusted over time to be more conservative as their target date (date the investor plans to start withdrawing funds) approaches. The principal value of the fund(s) is not guaranteed at any time, including at the target date.
Neither State Farm nor its agents provide investment, tax, or legal advice.Additional Disclosures
State Farm College Savings Plan (529)
Earnings must be used to pay for qualified higher education expenses to be federally tax free. The earnings portion of a non qualified withdrawal will be subject to ordinary income tax at the recipients marginal rate and subject to a 10% penalty. State Farm does not provide tax advice. Please consult your tax advisor for specific information about your tax situation, including any state tax consequences of an investment. The availability of such tax or other benefits may be conditioned on meeting certain requirements.
A $70,000 gift is viewed as an accelerated gift over five years. Any other gifts to the same beneficiary by the contributor in that tax year or in any of the succeeding four years may result in a federal gift-tax liability. If the contributor dies within the five-year period, a prorated portion of the contribution may be included in his or her taxable estate.
Contributions can be made until the value or total amount of contributions across all Nebraska program accounts for the beneficiary reaches $360,000. Accounts in excess of this limit can continue to grow through investment earnings realized by the plan, but no additional contributions can be accepted above that limit. This limit is set by the Nebraska State Treasurer and is subject to change.
The plan is intended to operate as a qualified tuition program, pursuant to section 529 of the U.S. Internal Revenue Code.
Participation in the plan does not guarantee that contributions and the investment earnings, if any, will be adequate to cover future tuition and other higher education expenses, or that a beneficiary will be admitted to or permitted to continue to attend an eligible educational institution.
This material is not an offer to sell or a solicitation of an offer to buy any securities. Any offer to sell shares within the plan may only be made by the Enrollment Handbook and Participation Agreement relating to the plan.
Neither the State of Nebraska, the Trust, the Nebraska State Treasurer, the Nebraska Investment Council, First National Bank of Omaha, Oppenheimer nor State Farm, nor any of their respective affiliates, directors, officers or agents shall have any debt or obligation to any contributor, any beneficiary or any other person as a result of the establishment of the plan, nor will these entities assume any risk or liability for mutual funds in which the plan invests.
The State Farm College Savings Plan is subject to enrollment, maintenance, administrative and management fees and expenses.
Investors in the plan do not hold shares of the underlying funds directly, but rather shares in a portfolio of the plan.
The State Farm College Savings Plan (the plan) is sponsored by the State of Nebraska and administered by the Nebraska State Treasurer. The plan is established in cooperation with State Farm VP Management Corp. (State Farm), the State of Nebraska, and OFI Private Investments Inc. (OFIPI), a subsidiary of OppenheimerFunds, Inc, pursuant to which State Farm offers classes of shares in a series of accounts within the Nebraska Educational Savings Plan Trust (the Trust and plan issuer) that are distributed by OppenheimerFunds Distributor, Inc. (OFDI and together with OFIPI, Oppenheimer). The Trust offers other accounts that are not affiliated with the plan.
The Nebraska State Treasurer serves as trustee of the plan; OFIPI serves as the investment manager, with the oversight of the Nebraska Investment Council; and servicing agent: OFDI serves as the distributor: First National Bank of Omaha serves as the program manager.
The State Farm College Savings Plan is not insured or guaranteed by State Farm, Oppenheimer, First National Bank of Omaha, the Trust, the State of Nebraska, the Nebraska State Treasurer, the Nebraska Investment Council, any of their respective affiliates, directors, officers or agents or any other entity.
Customized Portfolio Performance Benchmarks
The benchmarks for the Portfolios represent customized composites of market indices for the available Underlying Investments weighted by the relative target asset allocation for such portfolio.
Oppenheimer Capital Appreciation Fund Benchmark: The Russell 1000® Growth Index
The Russell 1000® Growth Index is a market-capitalization weighted index of those firms in the Russell 1000® Index with higher price-to-book ratios and higher forecasted growth values.
Oppenheimer Value Fund Benchmark: The Russell 1000® Value Index
The Russell 1000® Value Index is a market-capitalization weighted index of those firms in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values.
Oppenheimer Main Street Small- & Mid-Cap Fund® Benchmark: The Russell 2500® Index
The Russell 2500® Index tracks the common stock performance of the 2,500 smallest U.S. companies in the Russell 3000® Index, which represents approximately 17% of the total capitalization of the Russell 3000 Index.
Oppenheimer International Growth Fund: MSCI EAFE Index
The Morgan Stanley Capital International Europe, Australasia and Far East (EAFE®) Index currently measures the performance of stock markets of Europe, Australia, New Zealand, and the Far East and takes into account local market restrictions on share ownership by foreigners.
State Farm Bond Fund and Oppenheimer Global Strategic Income Fund Benchmark: The Barclays US Aggregate Bond Index
The Barclays US Aggregate Bond Index is a benchmark index composed of US securities in Treasury, Government-Related, Corporate, and Securitized sectors. It includes securities that are of investment-grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $250 million.
Federated US Government Securities Fund 1-3 yrs Benchmark: The Merrill Lynch U.S. Treasuries 1-3 Year Index:
The Merrill Lynch 1-3 Year US Treasury & Agency Index is a subset of The Bank of America Merrill Lynch US Treasury & Agency Index, an unmanaged fixed income index that includes U.S.Treasury fixed income securities (direct sovereign debt of the U.S. Government) in the maturity range equal to one year and less than three years.
Oppenheimer Institutional Money Market Fund Benchmark: iMoney Net First Tier Institutional Index:
The iMoneyNet First Tier Institutional Index (Also known as the MFR First Tier Institutional Index) is a subset of the Money Fund Reports (MFR) All-Taxable universe consisting of funds managed to a first-tier standard and which are offered to institutions only. Portfolio Holdings of first-tier funds include U.S. Treasury, U.S. Other, Repos, Time Deposits, Domestic Bank Obligations, Foreign Bank Obligations, First Tier CP, Floating Rate Notes, and AssetBacked Commercial Paper. The Money Fund Report AveragesTM are published by iMoneyNet, Inc. (formerly IBC Financial Data), and reflect yields net of fees and expenses.
Oppenheimer Developing Markets Fund: MSCI Emerging Markets Index:
The MSCI Emerging Markets Index is a capitalization-weighted index of stocks from 26 emerging markets that only includes issues that may be traded by foreign investors.
Investors cannot directly invest either in individual benchmark indices or combinations thereof.
Not FDIC Insured