Invest childcare money in your child's future

The cost of childcare for preschool age children can be one of the most significant expenses parents face. According to information collected in 2005 by the National Association of Child Care Resource and Referral Agencies, a family with a 4 year old child could pay average prices of between $3,016 and $9,628 a year for center-based child care. The price for infants is even higher. While childcare expenses may be unavoidable in two-income households, it can represent a significant increase in discretionary income once the child begins elementary school.

You may want to consider beginning an investment program using the money previously spent on childcare once your child begins elementary school. There are a number of investment opportunities available that also offer tax advantages while you accumulate funds to help pay future education expenses.

One investment vehicle is the Coverdell Education Savings Account (ESA). The annual ESA contribution limit is $2,000 per beneficiary. State Farm Mutual Funds® may be an appropriate choice for funding an ESA. You can make investments on a regular basis and contributions for the current year may be made until the tax filing deadline for that year (generally April 15 of the following calendar year). State Farm Mutual Funds have investment minimums that are among the lowest of mutual fund companies. It is important to note that there is market risk involved when investing in mutual funds, including possible loss of principal.

Although an ESA may be an effective investment vehicle, you may want to invest even more toward the education of your child. With a 529 college savings plan, you and your spouse may each contribute up to $12,000 per beneficiary annually without triggering gift taxes¹. The State Farm® College Savings Plan may be established with the help of your registered State Farm® Agent.

A quality education may be one of the most important factors in determining your child's future. These are only a few examples of the investment opportunities available. Take the time to speak with your registered State Farm® agent to learn more about the options you have in preparing for the education of your child.

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 your or the designated beneficiary’s home state offers any state tax or other benefits to its residents for investing in the plan offered by that 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.

The Nebraska State Treasurer serves as trustee of the plan; Invesco Aim Capital Management, Inc. serves as the investment manager, with the oversight of the Nebraska Investment Council; Invesco Aim Distributors, Inc. serves as the distributor; and Invesco Aim Investment Services, Inc. serves as the servicing agent, Union Bank & Trust Company serves as the program manager.

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.

nvesco 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.

Contributions can be made until the value of all accounts in the Nebraska Educational Savings Plan Trust for the beneficiary reaches $300,000 or the total amount of contributions for the beneficiary for all accounts in the Trust reaches $300,000. This limit is set by the Nebraska State Treasurer and is subject to change. Accounts in excess of this limit can continue to grow through investment earnings realized by the plan, but no additional contributions can be accepted by the plan when the value of all accounts plus any intended contribution is in excess of the limit.

The information presented in this document does not constitute 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. 

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

AP2008/04/0404