met-mesp presentation 183542 7
TRANSCRIPT
TIAA-CREF/ 1
T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E Welcome to our Presentation on Michigan’s 529 Plans
TIAA-CREF/ 2
2010-11
Tuition & Fees
2010-11
Room & Board
2010-11
Total Per Year
EstimatedCost for 4 years of college in 2010-11 without inflation
Estimated Cost for 4 years of college* in 18 years
Saginaw Valley University
$ 6,955 $ 7,768 $14,723 $ 58,892 $178,227
University of Michigan
$11,837 $ 9,912 $21,749 $ 86,996 $263,280
Alma College $29,230 $ 8,840 $38,070 $152,280 $460,852
Additional costs may include registration fees, text book and supplies, mandatory fees, transportation, parking passes, athletic fees, recreational facilities pass, computer lab costs, legal services, health service fee, etc…
Reflects In-state Tuition Rates for Michigan Residents.
*Estimating an annual 6% inflation factor per year for 18 years. Source: National Center of Education Statistics, IPEDS College Opportunities On-Line, 2007-2008 school year.
** College costs were taken from cited from college websites. www.svu.edu, www.umich.edu, www.alma.edu
Cost of College
A Wise Investment
$30,800$37,600
$49,900$59,500
$79,400
$95,700
High School Associate Bachelor's Master's Doctorate Professional
The lifetime gap in earning potential between a high school diploma and a BA exceeds $800,000
*Source: U.S. Census Bureau, 2006, PINC-03: IRS. as cited in The College Board, “Education Pays Update,” 2007. Assumes 35 years in work force and non-taxable income. www.collegeboard.com
• National Center for Education Statistics, 2009
Average cumulative student debt is $24,651*
6% increase since 2008
Among graduating 4 year undergraduate students who applied for federal student aid, 86.3% borrowed to pay for their education
54% of Financial Aid is in the form of loans
Graduate and professional students borrow even more with the additional cumulative debt for a graduate degree ranging from $30,000 to $120,000
Don’t do it with Debt
529 Direct-sold College Savings Plan started in 2000
$2.6 billion in assets and 223,600 accounts (August 2011)
Treasury Review & Annual Audit
First 529 Prepaid Tuition Plan implemented in 1988
$905.6 million in assets & 96,090 Contracts (August 2011)
Actuarial Review & Annual Audit
Michigan’s Section 529 Plans
529 Broker-sold College Savings Plan started in 2009
$76.8 million in assets & 9,872 accounts (August 2011)
Treasury Review & Annual Audit
MET & MESP Tax Benefits Michigan income tax deduction (annual)
MET - Total Contract Price MESP - $5,000 (single) or $10,000 (joint)
Tax Deferred Earnings/Growth
Tax Free Withdrawals if used for qualified expenses
Treated as completed gifts for federal estate and gift tax purposes
Michigan’s 529 Prepaid Tuition Plan Designed to allow parents, grandparents and
others to prepay college tuition Purchasing a contract for tomorrow’s education at
today’s cost Purchase credit hours
Provides in-state tuition and mandatory fees at any Michigan public college/university
Transfer of risk Funds pooled together for investment purposes
Secured by the assets of the Trust
What is MET?
Full Benefits - in-state rateLimited Benefits - 105% WAT
105% Weighted Average Tuition = $10,837 UM-AA (25 cr.) - MTU (26 cr.) - MSU (27 cr.)*
Community College - in-district rate Contract constitutes a completed gift for benefit
of a minor - age 18/h.s. graduate
*As of Fall 2011
Choice of Contract Options
Purchasing a Contract
One Purchaser per contractOne Beneficiary per contract Beneficiary must be Michigan residentNo age restrictions Name a Contingent Contract PurchaserTransferable to an immediate family
member (no residency requirement)Low fee program – 30 basis points
Use Your MET Contract: In-state tuition at Michigan public colleges and
universitiesUse at Out-of-State colleges and Michigan
independent collegesWith partial scholarshipsTo transfer among collegesTowards a graduate degree (AP credits)Within 15 years
Portable
Lump SumMonthly Purchase - Use Payroll
Deduction, ACH, Coupons1st monthly purchase due Feb. 25, May
25, or Sept. 25No obligation to continue monthly
purchasesEarly payoff discount
Payment Options
Prepay by Semesters (1/2 years)Maximum 10 Semesters (5 years) per
beneficiarySee Price Chart on page 35Flexibility
Multiple contracts per beneficiaryMix contract optionsNow or later
Flexible Purchase Options
Refund Amounts for Fall 2011
Reason for not attending Mich. Public college:(Refund amounts for Full Benefits Contracts)
Michigan private college Weighted Average Tuition - $10,321
Out-of-state institution or full scholarship Average Tuition - $10,109
Death, disability, not attending or military Lowest Tuition - $7,499
Lowest tuition refund can be used at any certificate or degree granting institution that offers financial aid to their students
Go to U.S. Dept. of Education Web site: www.ed.gov
Qualified Expenses*: tuition, fees, room, board, books, equipment required for enrollment
*Earnings are taxed & 10% fed. excise tax on the earnings apply if not used for qualified higher ed expenses at a qualified institution.
Qualified Institutions
Withdrawing Funds
Withdrawals for qualified expenses are exempt from federal and Michigan income taxes
Qualified Expenses
Submit Forms
• Notice to Use MET Educational Benefits
(form 3181) – Attending Mich. Public
College or University
• Notice to Terminate a MET Educational
Benefits Contract (form 2773) – Attending
Mich. Private, Out-of-State, Full
Scholarship, Not Attending College, Death
or Disability
2012 Contract Enrollment Period To be announced
Read the Contract, then Enroll: On line at www.SETwithMET.com By Mail Treasury Offices
Help Line: 1-800-MET-4-KID or (517) 335-4767
How to Enroll
What is MESP?
A Savings Plan With taxadvantages
With Flexibility in choosing
your investment options
TIAA-CREF
An industry leader in managing 529 plans
Unique focus on education
Over 90 years of investment experience
Over $419 billion in assets under management*
* As of March, 2011
Account Owner
Beneficiary
Account Owner• One account owner per account
• Valid Social Security Number
• U.S. address of record
•Contingent account owner
• No state residency required
• Full control
• Change beneficiaries
Beneficiary• One beneficiary per account
• Need a valid social security number to start
• No state residency required
• No age restrictions
• No time restrictions
• Beneficiary can be changed to another eligible family member of the original beneficiary
Opening An Account
Open an account with as little as $25 per investment option
Contribute as little as $15 per investment option
using payroll deduction How can you make a contribution?
Payroll deduction Bank account deduction (ACP) By check Gifts from family members and friends
Investment Options
Moderate Age-Based Allocation Option Conservative Age-Based Allocation Option Aggressive Age-Based Allocation Option 100% Equity Option Balanced Option 100% Fixed-Income Option Principal Plus Interest Option
Investment Options can vary in risk and objective. Please read the Disclosure Booklet prior to opening an account.
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Investment Options – Age Based
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Underlying investments are TIAA-CREF Institutional Mutual Funds. Investments in foreign securities are subject to special risks, including currency fluctuation and political and economic instability. These investment risks may be magnified in emerging markets.
Investment Performance is not guaranteed.
Investment Options
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Underlying investments are TIAA-CREF Institutional Mutual Funds. Investments in foreign securities are subject to special risks, including currency fluctuation and political and economic instability. These investment risks may be magnified in emerging markets.
Investment performance is not guaranteed.
Investment Options
Effective October 1, 2011, accumulations (including contributions and earnings) under the Funding Agreement for the Principal Plus Interest Option as of September 30, 2011 will be credited to MESP with an effective annual interest rate of 1.85%, and are guaranteed to earn this rate through September 30, 2012, subject to the claims-paying ability of TIAA-CREF Life Insurance Company.
Choosing The Best Option
Choose a combination of options
Allocate new contributions to any option
Transfer between options once per calendar year for
the same beneficiary or upon a change of beneficiary
*Note: The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating all the information, the ultimate decision is up to the account owner.
Low Cost ProgramMore of your investment can go toward education expenses, not account administration
Just $3.50 per $1,000 annually (low 0.35% fee) Management fee is used to cover
the cost of investment management and administration services
No other fees or charges will be applied to your account
Qualified InstitutionAny qualified institution in the nation and some abroad
Private or Public
College, University, or Community College
Trade or Career School
For any type of degree or certificate program
www.ed.gov
*Note: The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating all the information, the ultimate decision is up to the account owner.
Qualified Expenses
Online Withdrawals Download or request a
withdrawal request form KEEP RECEIPTS FOR YOUR
RECORDS
Withdrawals for qualified expenses are exempt from federal and Michigan income taxes
*Enrollment must be at least half-time with expenses eligible up to a specified level.
• Tuition and fees
• Books
• Certain room & board*
• Required supplies
Qualified Expenses
Withdrawing is easy
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T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E USE OUR COMPARISON CHART AT MISAVES.COM
Comparing College Savings Alternatives
Coverdell ESAs
Custodial Accounts Savings Bonds
Roth IRAs
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Comparison Chart on www.misaves.com
Similarities and Differences
SIMILARITIES
Both are Section 529 qualified tuition programs
State income tax deductions
Earnings are tax exempt for qualified withdrawals
Low Cost, No Commissions Transferable to immediate
family members Fund with after tax dollars Contribute with payroll
deduction, ACH or coupons
Can be used separately or together ($235,000 max.)
Recognized as owner’s asset for financial aid purposes
Rollovers accepted from other 529 programs
MET Prepay tuition with three
contract options Purchase credit hours, in
semester increments, at today's prices for future use
Best benefit at Michigan public institutions for tuition and mandatory fees
Refund amounts payable to in-state private or out-of-state institutions
Purchase for Michigan children – no age limit
15 years to use or refund Forget about tuition
increases, you are locked in
MESP Investment savings
account with seven investment options
Use at any "eligible educational institution"
Save for all qualified higher education expenses
Open an investment savings account with as little as $25
One change in investment strategy every twelve months
No age or time limit to use funds
Website Resources Gift Templates Calculators Webcasts Forms Promotions
www.setwithmet.com
www.misaves.com
For More Information
www.SETwithMET.com800-MET-4-KID(517) 335-4767
8 AM to 5 PM
www.misaves.com877-861-MESP
8 AM to 8 PM
Be sure to read the MET Contract Enrollment Booklet and/or the MESP Program Disclosure Booklet before investing, which are available on-line or from the Programs at the numbers
listed above.
Resources www.setwithmet.com
www.misaves.com
www.collegeboard.com
www.collegesavings.org
www.savingforcollege.com
www.finaid.com
www.ed.gov
T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E Thank you for joining us
MESP Disclosures Non Michigan residents or individuals with taxable income in another state
should evaluate benefits & tax treatments of other state 529 options prior to investing in MESP
Consider the investment objectives, risks, charges and expenses carefully before investing in MESP. Please visit www.misaves.com for a Disclosure Booklet containing this information. Read it carefully.
The tax information herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. It was written to support the promotion of the MESP. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.
TIAA-CREF Tuition Financing, Inc. , Program Manager