Transcript tomorrow's scholar

tomorrow’s scholar®
Start Investing for Tomorrow…
Today!
Disclosure statements
tomorrow’s scholar portfolios may invest in stock and bond investments. Stock
investment values fluctuate in response to the activities of individual companies and
general market and economic conditions. Bond investment values fluctuate in response
to the financial condition of individual issuers, general market and economic conditions,
and changes in interest rates. In general, when interest rates rise, bond investment
values fall and investors may lose principal value. Consult a program description for
additional information on these and other risks. There is no guarantee that an account
will grow enough to cover higher education expenses.
An investor’s or a designated beneficiary’s home state may offer state tax or other
benefits that are only available for investments in that state’s qualified tuition program.
Please consider this before investing.
Carefully consider the investment objectives, risks, charges, and expenses of
tomorrow’s scholar before investing. For a current program description, containing
this and other information, call 1-866-677-6933 or visit tomorrowsscholar.com. Read it
carefully before investing.
tomorrow’s scholar is a state-sponsored 529 college savings plan administered by the Wisconsin Office of the State Treasurer. Wells Fargo
Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment management and administrative
services to the tomorrow’s scholar plan. Shares in the program are distributed by Wells Fargo Funds Distributor, LLC, Member
FINRA/SIPC, an affiliate of Wells Fargo & Company. 206862 01-12
NOT FDIC INSURED – NO BANK GUARANTEE – MAY LOSE VALUE
Agenda
 Why invest for college
 Different college investing options
 What are 529s all about?
 tomorrow’s scholar
 Investment options within tomorrow’s scholar
 The multi-manager strategy
 SAGE Scholars Tuition Rewards® Program
Why investing for college is important
 Why is investing for college important?
 College can help a child or grandchild have a
brighter future
 Reduces reliance on student loans
 Uses time and the power of compounding to
your advantage
 Keeps your options open by planning ahead
Will you have enough for college?
The rising costs of a four-year college
 Tuition, books, room & board add up quickly
$500,000
$400,000
$454,439
$300,000
Private University
$200,000
$100,000
$0
2012
Public University
2014
2016
2018
2020
2022
2024
2026
2028
$210,873
2030
Costs based on 2011-2012 estimate of average tuition, fees, and room and board in current dollars for
4-year public and private universities according to the 2011 Trends in College Pricing published by the
College Board. Projected pricing assumes a 6% annual increase in college costs.
The power of planning ahead
$350
$300
Invest now or borrow later:
To cover $25,000 in college
expenses, investing for 10 years
before college is a lot cheaper
than paying back loans for 10
years after college.*
Advantage of Investing
vs. Student Loans
$165.56/month
$301.31
$250
$200
$150
$135.75
$100
$50
$0
Monthly Investment
Monthly Loan Payment
*Assumptions: Total cost of college $25,000; 8% annual return on investments and 8% loan interest rate, compounded
monthly; 10-year investing period and 10-year loan payback period. Annual return does not represent the performance of
any tomorrow’s scholar portfolio.
Putting time on your side
Regular contributions of any amount can really add up
over time.
$100,000
$92,083
$80,000
This chart shows an
account with monthly
contributions over a 10year period.
$60,000
$46,041
$40,000
$23,021
$20,000
$0
$125
per month
$250
per month
$500
per month
A program of regular investment cannot assure a profit or protect against a loss in a declining market.
This hypothetical illustration assumes an average annual return of 8%. Annual return does not represent the
performance of any specific investment.
College investing options
 UGMA/UTMAs
 Coverdell Education Savings Accounts
 Roth IRAs
 Savings Bonds
 529 College Savings Plans
529s vs. other investing vehicles
529s
UGMA/
UTMA
Coverdell
Education
Savings
Account
Savings
Bonds
Roth IRA
Federal Tax
Deferral
YES
NO
YES
YES
YES
Maximum
Contribution
Established by
program; many
in excess of
$300,000
NONE
$2,000 per
beneficiary, up
to age 18
$5,000 annually
for Series EE
and I Bonds for
each series
$5,000 in 2012;
adjusted for
inflation
thereafter
Income
Limits
NO
NO
YES
YES
YES
Time/Age
Restrictions
NO
YES
YES
YES
YES
Estate
Planning
YES
YES
YES
YES
YES
Gift Planning
YES
YES
YES
NO
NO
The benefits of investing in 529s
While not all investors may be able to take advantage of
all the tax and other benefits of tomorrow’s scholar, here
are four key features that may benefit you.
 Flexibility
 Control of the account
 Tax advantages
 Estate planning
Flexibility of 529s
 High contribution limits
 Anyone can contribute – no income restrictions or
age limitations
 Use at schools nationwide and many abroad for a
wide range of expenses
 Money can be used for qualified expenses, including
tuition, fees, books, supplies, room and board (the
student must be enrolled at least half-time), and
required equipment
Note: Individual states impose their own restrictions and rules on 529 College Savings Plans.
Control of the account
 Control of assets remains with the person who
establishes the account
 Successor
 Distribution
 Beneficiary
The power of tax-deferred growth
Compare the growth potential of a taxable investment vs. a tax-deferred 529 account
$250,000
$201,369
$200,000
$172,744
$150,000
$100,000
$71,405 $76,736
$50,000
$29,989 $30,819
$0
5 Years
Taxable Investment
10 Years
18 Years
Federal Tax-Deferred 529 Plan Investment
This hypothetical illustration shows the growth of an annual investment of $5,000 made at the beginning of each
year. It assumes a 28% tax bracket and an annual return of 8%, compounded monthly with a tax rate of 15% for
dividends and long-term gains and 28% for short-term gains. The chart is for illustration only and does not predict or
guarantee the performance of any tomorrow's scholar portfolio. Investors should consider their personal investment
horizon, as well as their current and anticipated income tax brackets when making an investment decision.
One size does not fit all
In-state vs. out-of-state plans
 State tax treatment of 529 plans varies from state to state
and can be a factor in deciding which plan to select
 Some states offer a 529 tax deduction for state residents;
others might offer a tax credit for 529 contributions
 Understand the value of your state's tax deduction
 In some cases, the tax deduction benefit may be
offset by performance, contribution limits, and other
plan features that are important to you
Estate planning benefits
 Can gift up to $65K ($130K married couple) per child
in one year without incurring gift and generationskipping transfer taxes, provided no other gifts are
made to the same beneficiary in the 5-year period
 Contributions to the plan qualify for the $13K ($26K
married couple) annual gift tax exclusion
 Contributions are considered removed from the
donor’s estate*
*If donor contributes more than $13,000 in one year and elects to apply the gift tax exclusion ratably over 5
years but dies before the close of the 5-year period, the portion allocable to calendar years beginning after the
date of death is included in the decedent’s estate.
Grandparents can get involved too
Decrease your taxable estate while paying for college
Grandparents
$520,000
Grandchild 1
$130,000
Grandchild 2
$130,000
Grandchild 3
$130,000
Grandchild 4
$130,000
The gift tax exclusion can be very powerful. In this example, a grandfather and
grandmother each provide 4 one-time gifts of $65,000 to 4 grandchildren. The
$65,000 gifts are prorated over five years and a total of $520,000 is removed from
the couple’s taxable estate.
tomorrow’s scholar
Wells Fargo and the State of
Wisconsin have teamed up to
offer the tomorrow’s scholar
college savings plan.
The program is managed by
Wells Fargo Funds
Management, LLC.
The flexibility of multiple options
Wide range of options to meet your needs
 Seven fixed allocation options
 Offering a range of investments, from more
aggressive to very conservative
 Three enrollment-based tracks
 Offering portfolios that are based on the number
of years until college enrollment
 These options automatically get more
conservative as the years go by
Fixed allocation portfolios
Aggressive
Growth Portfolio
Moderate
Growth Portfolio
Growth
Portfolio
10% 13%
25%
Balanced
Portfolio
9%
11%
7%
40%
77%
64%
Conservative
Portfolio
Income
Portfolio
3%
17%
5%
30%
65%
50%
51%
43%
Ultra-Conservative
Portfolio
100%
80%
International Stock Funds
Bond Funds
Domestic Stock Funds
Money Market Funds
Enrollment-based portfolios
Aggressive Growth
Track Portfolios
Moderate Growth
Track Portfolios
Conservative Growth
Track Portfolios
100%
100%
80%
80%
80%
60%
60%
60%
40%
40%
40%
20%
20%
20%
0%
0%
0%
10 or
more
7 to 9 4 to 6 1 to 3
In
College
10 or
more
7 to 9 4 to 6 1 to 3
In
College
100%
10 or
more
7 to 9 4 to 6 1 to 3
In
College
Years to College
International Stock Funds
Domestic Stock Funds
Bond Funds
Money Market Funds
The strength of a multi-manager strategy
The portfolios include investments from the
following fund families:
 Wells Fargo Advantage Funds®
 Harbor Funds
 Columbia Funds
 ING Funds
SAGE Scholars Tuition Rewards
 Allows tomorrow’s scholar account owners to receive discounts
for undergraduate school tuition at participating private schools
throughout the country
 Awards tuition points based on your account balances – up
to 10% annually
 Each reward point equals $1 in guaranteed tuition discounts
at participating private colleges and universities
 Over 265 member schools
 No fee to join
 Enroll online at tomorrowsscholar.com/sagescholars
The Tuition Rewards program is offered and administered by SAGE Scholars, Inc., a private for-profit corporation.
SAGE Scholars is not sponsored by or affiliated with Wells Fargo or the tomorrow’s scholar college savings plan.
Why tomorrow’s scholar?
Although not all investors may be able to take advantage
of all the tax and other benefits of tomorrow’s scholar,
here is a recap of the key benefits.
 Tax advantages
 Flexibility
 Estate planning and gifting benefits
 Multiple investment options
 Multi-manager investment approach
 SAGE Scholars Tuition Rewards Program
Start investing for tomorrow…today
Don’t wait to plan your
scholar’s future.
Contact your investment
professional today to find out
how to get started or visit
www.tomorrowsscholar.com.