As parents and grandparents, we want to provide our children with the brightest possible future. One of the best ways to have a successful future is through higher education. Both the federal and state governments have made it easier to save for college. There are tax-favored choices that can help put a college education within reach.

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Coverdell Education Savings Account (ESA)

The Coverdell ESA was created as an incentive to help parents and students save for education expenses.

The total contributions for the beneficiary of this account cannot be more than $2000 in any year, no matter how many accounts have been established.

Contributions to a Coverdell ESA are not tax-deductible, but amounts deposited in the account grow tax free until distributed.

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UGMA/UTMA Accounts

UGMA and UTMA accounts allow you to invest for a child’s future while taking advantage of the child's potentially lower tax rate.

While UGMA and UTMA accounts are not specifically designed to provide financing for college, many parents and grandparents use them for this purpose because the assets become available to the child when he or she reaches the age of majority specified under the state's UGMA or UTMA law.

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State Farm College Savings (529)

The State Farm® College Savings Plan is an education savings plan operated by the state of Nebraska designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which introduced these types of savings plans in 1996.

Our plan can be used to meet the costs of qualified colleges nationwide. Your choice of school is not affected by the fact our plan is sponsored by the state of Nebraska.

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College Savings Plans Comparison Chart

Coverdell ESA State Farm College Savings Plan (529) UGMA/UTMA
Highlights The Coverdell ESA is a trust or custodial account that provides individuals a tax-advantaged method to save up to $2,000 per year for a child's education – both elementary/secondary education (kindergarten through grade 12) and post-secondary education (college, graduate school, vocational school, etc.) – and may be established for the benefit of any child under age 18. The State Farm College Savings Plan is a qualified tuition plan operated according to section 529 of the Internal Revenue Code, The State Farm College Savings Plan, sponsored by the state of Nebraska, helps make college investing simple, affordable, and convenient. An account can be established for a child under the Uniform Gift to Minors Act (UGMA) or the Uniform Transfer to Minors Act (UTMA), depending on which law applies in the relevant jurisdiction. The UGMA/UTMA account allows someone to make gifts or transfers of property to a minor without setting up a trust. The transfers made to an account of this type are considered an irrevocable transfer to the minor in whose name the account is registered.
Contribution Limit Up to $2000 per child (under age 18) can be made by contributors with a modified adjusted gross income of no more than $190,000 if filing jointly or $95,000 for single filers. The maximum is reduced and gradually phased out for those with a modified adjusted gross income between $190,000 and $220,000 (joint filers) or between $95,000 and $110,000 (single filers). Those who exceed these income limits are not eligible to make contributions. The contribution limit varies by state or institution (a plan cannot accept contributions that exceed the amount necessary to provide for the beneficiary’s qualified expenses.) None
Financial Aid Impact The Coverdell ESA is treated as an asset of the account owner. If the account owner is the student, this has a high impact on financial aid eligibility. How the plan might affect financial aid depends on whether it is owned by the student or the parent. Please see the FinAid website for more specific information. For financial aid purposes, custodial accounts are considered assets of the student. This means there is a high impact on financial aid eligibility.
Tax Treatment Tax-deferred growth.

Earnings are tax free if used for eligible education expenses, which include room and board, tuition, books, supplies and equipment, academic tutoring, and special needs services.		 Earnings are free from federal (and possibly state) income taxes.

Withdrawals are federal-income-tax-free if used for qualified higher education expenses. 		Since 2008, the first $900 of a child's investment income is tax free and the next $900 is taxed at his or her own rate, but any unearned income in excess of $1,800 is taxed at the parents' presumably higher tax rate.
There are potential gift tax and estate tax savings.

The availability of such tax or other benefits may depend on meeting certain requirements.		 In 2008, the kiddie tax was expanded to include dependents under 19 and dependent full-time students under 24. Children who provide more than half of their own support are not affected by this kiddie tax change.
Coverdell ESA State Farm College Savings Plan (529) UGMA/UTMA

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Risk Disclosures

Investing involves risk, including potential for loss.

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 investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.

More information on the four Nebraska 529 plans can be found at the Nebraska State Treasurer’s website.

Additional Disclosures

Mutual Funds Disclosures

Before investing, consider the funds' investment objectives, risks, charges and expenses. Contact State Farm VP Management Corp (1-800-447-4930) for a prospectus or summary prospectus containing this and other information. Read it carefully.

General

Automatic investment plans do not assure a profit or protect against loss.

Neither State Farm nor its agents provide investment, tax, or legal advice.

It is not possible to invest directly in an index.

State Farm VP Management Corp. is a separate entity from those State Farm entities which provide banking and insurance products.

As of June 2nd, 2010, additional fees may apply to certain accounts with balances less than $5000.

Each State Farm LifePath Fund invests all of its assets in a corresponding LifePath Master Portfolio under a master/feeder structure. BlackRock Fund Advisors (“BFA”) is the investment advisor to the LifePath Master Portfolios. State Farm Investment Management Corp. (SFIMC) is the investment advisor to the State Farm LifePath Funds. State Farm VP Management Corp. (SFVPMC) is the distributor of the State Farm LifePath Funds. Neither SFIMC or SFVPMC, or their affiliates, are affiliated with BFA or its affiliates.

BlackRock Investors Services (BIS) provides marketing support to the LifePath Master Portfolios. BFA and BIS are wholly owned subsidiaries of BlackRock Institutional Trust Company, N.A. (“BTC”). Neither BTC or its affiliates are affiliated with State Farm. BTC is located at 400 Howard Street, San Francisco, CA 94105.

BlackRock Fund Advisors (“BFA”) is the investment sub-advisor to the S&P 500 Index Fund.

Ascensus provides recordkeeping and administrative services for retail 401(k) retirement plans offered by State Farm Investment Management Corp.

Net Asset Value (NAV) is calculated by adding all of the assets of a Fund, subtracting the Fund's liabilities, then dividing by the number of outstanding shares.

Indices

The Russell 2000 Index tracks the common stock performance of the 2,000 smallest U.S. companies in the Russell 3000 Index.

The Russell 2500 Index tracks the 2,500 smallest companies in the Russell 3000 Index.

The Russell 1000 Index is a stock market index that represents the highest-ranking 1,000 stocks in the Russell 3000 Index.

The Russell Midcap Index measures the performance of the mid-cap segment of the US equity market and is a subset of the Russell 1000 Index.

The Dow Jones Industrial Average is an unmanaged average of 30 actively traded stocks.

The NASDAQ Composite is an unmanaged market capitalization weighted index that is designed to represent the performance of the National Market System.

The S&P 500® Index tracks the common stock performance of 500 large U.S. companies.

The S&P 1500 Index is a stock market index of U.S. stock that includes all stocks in the large cap S&P 500 Index, the mid cap S&P 400 Index, and the small cap S&P 600 Index.

The Morgan Stanley Capital International Europe, Australasia and Far East Free (EAFE® Free) Index currently measures the performance of stock markets of Europe, Australia, New Zealand, and the Far East.

The Morgan Stanley Capital International Europe Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe.

The Barclays 1-5 Year U.S. Treasury Index measures the performance of short-term U.S. Treasury Securities maturing within one to five years.

The Barclays U.S. Aggregate Bond Index represents debt securities in the U.S. investment grade fixed rate bond market.

The Barclays Municipal Bond Index is an unmanaged index representative of the tax-exempt bond market.

The Barclays High Yield Index includes all fixed income securities having a maximum quality rating from Moody's Investor Service of Ba1, a minimum amount outstanding of $100 million, and at least one year to maturity.

The Barclays TIPS Index measures the performance of the US Treasury Inflation-Protected Securities (TIPS) market.

The Citigroup 3 Month T-Bill Index is an average of the last 3-month Treasury bill issues (excluding the current month-end bill).

The FTSE EPRA/NAREIT Developed REIT and Non-Reit Index is a subset of the Developed Index, which is designed to track the performance of listed real estate companies and REITS worldwide.

The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.

The Nikkei 225 Index is a price-weighted index comprised of Japan’s top 225 blue-chip companies on the Tokyo Stock Exchange.

The Credit Suisse High Yield Index is designed to mirror the investible universe of the $U.S. – Denominated high yield debt market.

The Blended Benchmark for the Equity and Bond Fund is a combination of 60% of the S&P 500 Index and 40% of the Barclays U.S. Aggregate Bond Index, rebalanced monthly.

The Blended Benchmark for the LifePath Funds is a combination of the holdings in the Barclays U.S Aggregate Bond Index, Russell 1000 Index, MSCI ACWI ex-U.S. Index, FTSE EPRA/NAREIT Developed Real Estate Index and Barclays TIPS Index. The weightings of the indices are adjusted quarterly to reflect the funds' changing asset allocations over time.

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 recipient’s 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.

AP2012/03/0383

Not FDIC Insured
  • No Bank Guarantee
  • May Lose Value

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