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In 1996, Congress added section 529 to the Internal Revenue Code to allow for the creation of state-sponsored college savings plans. Through these plans, its participants may take advantage of tax breaks while saving for a child's future education. That's what The State Farm® College Savings Plan sponsored by the State of Nebraska  is designed to do--help you make saving for college a priority while offering tax benefits that some other savings vehicles can't provide. It is important to note that there is market risk involved when investing in mutual funds, including possible loss of principal.

No federal income taxes on earnings used for qualified withdrawals

You make after-tax contributions to the account, but you don't 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 be conditioned 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 income tax free. The earnings portion of a non-qualified withdrawal will be subject to ordinary income tax at the recipient’s marginal tax rate and subject to a 10% tax penalty.

The information presented in this document does not constitute tax advice. State and local tax laws vary. Additionally, your home state may only offer favorable tax treatment for investing in a plan that your state offers.

Please consult your tax advisor for specific information about your tax situation, including any state tax consequences of an investment. Tax-free growth means more of your dollars remain in the account, potentially accelerating your investment's growth through compounding over time. So less of your money goes to pay taxes and more goes where it belongs--to pay for college.

Your choice of schools

Withdrawals may be used to cover qualified higher education expenses incurred while the student is enrolled in an eligible institution. Any institution eligible to participate in federal financial aid programs administered by the U.S. Department of Education qualifies, including most U.S. universities and professional schools and a variety of vocational schools.

Low minimum enrollment, high contribution limit

You can open a State Farm® College Savings Plan account with just $500, then make subsequent investments of $50 or more. If you choose to make automatic monthly investments, you need only $50 to open the account, followed by $25 automatic monthly contributions.

Systematic investment plans do not ensure a profit and do not protect against a loss in declining markets. Since systematic investing involves continuous investing regardless of fluctuating prices, you should consider your ability to continue investing through periods of low price levels.

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

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) .

Need Assistance? 1-800-447-4930

AP2008/04/0408