Give the Gift of Education

If you are like most parents, you want to provide your children ample opportunities to excel in life. One way for a child to become prepared for such opportunities is by obtaining a college education. Unfortunately, the cost of a college degree is getting higher every year, making it more difficult for a family to afford higher education.

One way to help your child, grandchild, niece or nephew pay for future college expenses is to make a contribution to a Coverdell Education Savings Account (ESA). And, if you make a contribution for a special occasion (birthday, holiday, etc.), you will be given a gift card to fill out and present to the child or children for whom an ESA was established.

The gift card tells your child, grandchild, niece or nephew that you care enough about them to invest in their future. And, if you are the person responsible for the account, you can keep an eye on the ESA to see how your investment is performing.

With an ESA, you have a variety of options in which to invest, including State Farm Mutual Funds®. There are 15 mutual funds available, each with a separate investment objective that may be an appropriate choice to help you meet your goals. It is important to note that there is market risk involved when investing in mutual funds, including possible loss of principal.

The Coverdell ESA was created to provide an investment opportunity where the proceeds may be used to pay for qualified education expenses. These qualified expenses may include elementary, secondary, and higher education. When money is withdrawn to pay qualified expenses, there is no federal income tax charged on that withdrawal.

Contributions are permitted up to $2,000 per year per child until that child is 18 and may be made until the contributor's federal income tax return filing deadline, usually April 15 of the following year. In other words, contributions for 2008 may be made until April 15, 2009.

In addition, any number of persons may contribute to an ESA, as long as the total amount of those contributions does not exceed the $2,000 limit. You may also contribute to as many ESAs as you wish while adhering to the $2,000 limit per child. Contributions must end when the beneficiary turns 18 years of age unless that child is a special needs beneficiary.

To open an ESA or for more information, contact your registered State Farm® agent or call 800-447-4930 to speak with a Securities Products Representative.

State Farm VP Management Corp Risk/Important Disclosures. State Farm Mutual Funds Prospectus. The State Farm College Savings Plan Enrollment Handbook (PDF 445 KB) .

Need Assistance? 1-800-447-4930

AP2009/03/2382