529 Withdrawals

• 529 Basic Information
• 529 Contributions
• 529 Withdrawals
• Financial Aid

Q: What types of costs may be paid with withdrawn funds?
A: Withdrawals from an account may be used to pay higher education costs. These include tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution.  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 bachelor's degree, an associate's 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.

Q: How do I make qualified withdrawals?
A: You may request a qualified withdrawal at any time and elect any of the following distribution options:

• The distribution may be made directly to an institution of higher education.
  
  
• The distribution may be made in the form of a check payable to both the beneficiary and the institution of higher education.
  
  
• The distribution may be made in the form of a check payable to you or the beneficiary.

If you request a qualified withdrawal in the form of a check payable to you or the beneficiary, and if taking such withdrawal would otherwise subject you to the payment of a contingent deferred sales charge, then your request for the withdrawal should be accompanied by documentation to show that the distribution is a reimbursement for higher education costs that have already been paid. If you fail to provide such documentation with your request, the servicing agent will retain an account balance that is large enough to collect any contingent deferred sales charge; provided, however, that the servicing agent will refund the contingent deferred sales charge to you if you provide documentation of the payment of higher education costs on or before the earlier of (i) the 30th day following the date the distribution request is received by the servicing agent, or (ii) December 31 of the year in which the distribution request is processed by the servicing agent.

The servicing agent requires documentation to show that a distribution is a reimbursement for higher education costs solely for purposes of assessing any applicable contingent deferred sales charge. Any determination made by the servicing agent in this regard is not determinative of the qualified or non-qualified status of any withdrawal for federal or state tax purposes.

To request a qualified withdrawal from your account, you should contact your State Farm VP Management Corp. Registered Representative or the servicing agent. The minimum withdrawal amount is $50.

Q: When must withdrawals begin?
A: There is no set date or age by which you must begin making withdrawals from your account.

Q: May I make withdrawals for other purposes?
A: Yes, but any such withdrawal will be a non-qualified withdrawal unless
it is:

• a withdrawal paid to the estate of the beneficiary or as otherwise allowed by the Code upon the death of the beneficiary;
  
  
• a withdrawal attributable to the beneficiary being disabled;
  
  
• a withdrawal made on account of the receipt of a scholarship or other financial aid received by the beneficiary to the extent that the amount of the withdrawal does not exceed the amount of such scholarship or financial aid; or
  
  
• a qualified rollover distribution.

The investment earnings portion of a non-qualified withdrawal is included in the recipient's income for federal tax purposes, and the recipient's federal income tax will be increased by an amount equal to 10% of the earnings portion of the withdrawal. In addition, any applicable contingent deferred sales charges will be assessed by the servicing agent.

Please refer to the Enrollment Handbook (PDF 260 KB) for more information on The State Farm® College Savings Plan.

The State Farm College Savings Plan is available by registered representatives of State Farm VP Management Corp., One State Farm Plaza, Bloomington, IL 61710, 1-800-447-4930. Please read carefully the Enrollment Handbook and Participation Agreement and consider the investment objectives, risks, fees and expenses and other information associated with The State Farm College Savings Plan before investing or sending money. State and local tax laws vary. If you or the designated beneficiary are not Nebraska residents, you should consider before investing whether you or the designated beneficiary's home state offers any state tax or other benefits to its residents for investing in the plan offered by the state.

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"), Invesco Aim Distributors, Inc. and the State of Nebraska, 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 managed and distributed by Invesco Aim Capital Management, Inc. ("Invesco AIM") and its affiliates. The Trust offers other accounts that are not affiliated with the plan. State Farm does not provide investment management services for the plan and the accounts in the plan are not insured or guaranteed by State Farm, Invesco Aim, Union Bank and Trust Company, 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.

Invesco AimSM is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Invesco Aim Distributors, Inc. is the distributor for the retail mutual funds, exchange-traded funds and U.S. institutional money market funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.

State Farm and Invesco Aim are not affiliates. Invesco Aim Distributors Inc. is the distributor of the plan.

State Farm VP Management Corp Risk/Important Disclosures. State Farm Mutual Funds Prospectus. The State Farm College Savings Plan Enrollment Handbook (PDF 260 KB) .

AP2008/04/0411