Transcript EdVest Presentation

Make the Most Of Your
Investments for College
Disclosure statements
EdVestSM 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 investment in the Wells Fargo Money Market Portfolio is not insured or guaranteed by the FDIC or any other
government agency. Although the Portfolio seeks to preserve the value of your investment at $10.00 per share, it is
possible to lose money by investing in it. Consult the program description for additional information on these and
other risks.
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 EdVest before investing. For a current
program description, containing this and other information, call 1-888-338-3789 or visit EdVest.com. Read it carefully
before investing.
EdVest is a state-sponsored 529 college savings plan administered by the State of Wisconsin. Wells Fargo Funds Management, LLC, a
wholly owned subsidiary of Wells Fargo & Company, provides investment management and administrative services for the EdVest plan.
Shares in the program are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo &
Company. 206861 01-12
NOT FDIC INSURED  NO BANK GUARANTEE  MAY LOSE VALUE
Today’s topics
 Why invest for college?
 Investing in a 529 plan
 The benefits of EdVest
 EdVest investment options
 Getting started
 Questions & answers
Why invest for college?
 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
Private
University
University
Private
University
$200,000
$0
2012
$210,873
Public
University
Public
University
Public University
$100,000
2014
2016
2018
2020
2022
2024
2026
2028
2030
Costs based on 2011-2012 estimate of average tuition and room and board in current dollars for four-year public
and private universities according to the 2011Trends in College Pricing, published by the College Board.
Projected pricing assumes a 6 percent 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 Repayment
*Assumptions: Total cost of college $25,000; 8% annual return on investment 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 specific investment.
Putting time on your side
Regular contributions of any amount can really add up
over time.
$100,000
This chart shows an
account with monthly
contributions over a
10-year period.
$301.31
$92,083
$80,000
$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.
Investing in a 529 plan
EdVest – A Wisconsin 529 plan
 A flexible, tax-advantaged investing program
 A state-sponsored “Section 529” College Savings Program
 Administered by the State of Wisconsin
 Managed by Wells Fargo Funds Management, LLC
 An easy, effective way to invest for higher education regardless
of income level
The benefits of EdVest
While not all investors may be able to take advantage of all the
tax and other benefits of EdVest, here are four key features that
may benefit you.
 Tax advantages
 Wisconsin state tax deductions
 Income tax benefits
 Gift and estate tax benefits
 Flexibility
 Control of the account
 Eligibility
Tax advantages
 Wisconsin state tax deduction
 Up to $3,000 annually from taxable state income
per beneficiary
 Available for parents, grandparents, great-grandparents,
aunts and uncles
 Also available for individuals who open accounts
for themselves
 Contribute by December 31 of the current tax year
Tax advantages
 100% Federal and Wisconsin state income tax-free
qualified withdrawals
 Qualified education expenses include:
 Tuition
 Room and board
 Books
 Certain special needs services
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 a hypothetical annual return of 8%, compounded monthly. This chart is
for illustration only and does not predict or guarantee the performance of any investment. Investors should
consider their personal investment horizon and their current and anticipated income tax brackets when making
an investment decision.
Gift and estate tax benefits
 Contributions are considered a completed gift and are eligible
for the annual $13,000 ($26,000 for married couples) gift tax
and generation-skipping exemptions
 For larger contributions, up to a $65,000 ($130,000 for married
couples) one-time gift may be prorated over five years
 IRS form 709 should be filed to report this contribution
 All contributions are removed from the contributor’s
taxable 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.
Gift and estate tax benefits
$195,000
Gifts $65,000 per
grandchild
Grandfather Smith
+
Gifts $65,000 for
same grandchildren
$195,000
= $390,000
Grandmother Smith
removed from the couple’s
taxable estate
The gift tax exclusion can be very powerful. In this example, a grandfather and grandmother
each provide 3 one-time gifts of $65,000 to 3 grandchildren. The gifts are prorated over five
years and a total of $390,000 is removed from the couple’s taxable estate.
Flexibility
 Funds can be used at thousands of colleges, universities,
technical schools, graduate schools, and trade schools
nationwide, and many abroad
 Money can be used for tuition, room and board (the student
must be enrolled at least half-time), books, and other
expenses
 High contribution limit
 Can use an automatic investment plan or payroll deduction
A program of regular investment cannot assure a profit or protect against a loss in a declining market.
Control of assets
 Control remains with the person who establishes the account
 There is no obligation to distribute the funds
 If the child doesn’t go to college, the owner can change the
beneficiary or withdraw the funds*
 The owner can:
 Make an investment change for existing assets once per
calendar year, or at any time with a change in beneficiary
 Choose a successor owner
 Make distribution decisions concerning the assets
*The earnings portion of non-qualified withdrawals is treated as income and is subject to applicable federal and
state income tax as well as an additional 10% federal tax.
Eligibility
 Everyone is eligible!
 Anyone of legal age can open an account for anyone else
 There are no age limits on beneficiaries
 Anyone can contribute to an existing account
 You can even open an account for yourself
 No income limits for contributors
 Transfers allowed tax-free and penalty-free to eligible
family members
SAGE Scholars Tuition Rewards®
 Allows EdVest 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 EdVest.com/sage
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 EdVest college savings plan.
EdVest investment options
EdVest investment options
 Wide range of investment options to meet your needs
 Eleven fixed allocation options
 Offering a range of investments, from more
aggressive to very conservative
 Three enrollment-based options
 Offering portfolios that are based on the number of
years until college enrollment
 These options automatically become more
conservative as the years go by
Fixed allocation portfolios
Aggressive Portfolios
More Aggressive
Less Aggressive
Vanguard Small Cap
Index Portfolio
Vanguard Stock
Index Portfolio
100%
100%
100%
100%
Invests entirely in the
Vanguard Small-Cap
Index Fund.
Vanguard
International
Index Portfolio
Invests entirely in the
Vanguard Institutional
Index Fund.
Wells Fargo
Aggressive Portfolio
10% 17%
100%
100%
73%
Invests entirely in the
Vanguard Total International
Stock Index Fund.
International Stock Funds
Domestic Stock Funds
Invests primarily in Wells
Fargo Advantage U.S. stock
and international funds.
Bond Funds
Fixed allocation portfolios
Moderate/Balanced Portfolios
More Aggressive
Less Aggressive
Wells Fargo
Moderate
Portfolio
30%
Wells Fargo
Balanced Portfolio
Vanguard
Balanced
Portfolio
13%
30%
57%
Invests primarily
in Wells Fargo
Advantage U.S.
stock funds.
30%-40%
100%
30%40%
60-70%
60%-70%
9%
50%
41%
8%
Invests in both Wells
Fargo Advantage
stock and bond funds.
Invests entirely in the Vanguard
WellingtonTM Fund.
International Stock Funds
Domestic Stock Funds
Bond Funds
Fixed allocation portfolios
Conservative Portfolios
Less Conservative
More Conservative
Wells Fargo
Conservative
Portfolio
Wells Fargo
Bond Portfolio
5%
25%
100%
70%
Invests
primarily in
Wells Fargo
Advantage
bond funds.
Vanguard Bond
Index Portfolio
Invests only in Wells
Fargo Advantage
bond funds.
Wells Fargo
Money Market
Portfolio
100%
100%
Invests entirely in the
Vanguard Total Bond
Market Index Fund.
Invests entirely in the Wells
Fargo Advantage Heritage
Money Market FundSM
International Stock Funds
Bond Funds
Domestic Stock Funds
Money Market Funds
Enrollment-based portfolios
Aggressive Growth
Moderate Growth
Conservative Growth
10+ Years to College
7-9 Years to College
4-6 Years to College
1-3 Years to College
In College
International Stock Funds
Bond Funds
Domestic Stock Funds
Money Market Funds
Why EdVest? A review
Although not all investors may be able to take advantage of
all the tax and other benefits of EdVest, here is a recap of the
key benefits.
 Tax advantages
 Flexibility
 Control of the account
 Eligibility
 SAGE Scholars Tuition Rewards Program
 Multiple investment options
Thank You