SMART WAYS TO MAXIMIZE COLLEGE SAVINGSBe Aware of Unintended ConsequencesIndividually, each college savings strategy has its own strengths and weaknesses. But as these scenarios demonstrate, relying on just one could present unintended consequences. Finding the right multi-strategy combination can form a powerful blueprint to help maximize your college savings and minimize risk.

1. “The Cost of Public Four-Year College Has Risen 27 Percent Over Five Years,” Bryce Covert, ThinkProgress.org, Aug. 14, 2013, http://thinkprogress.org/economy/2013/08/14/2460861/the-cost-of-a-public-four-year-college-has-risen-27-percent-over-five-years/, accessed Feb. 28, 20142. “What College Tuition Will Look Like in 18 Years,” Stephanie Landsman, CNBC.com, May 25, 2012, http://www.cnbc.com/id/47565202, accessed Feb. 28, 20143. “What’s the Price Tag for a College Education?” CollegeData.com, https://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064, accessed March 11, 20154. “Three Ways To Save for Your Child’s Future,” Christina Couch, Bankrate.com, http://www.bankrate.com/finance/savings/3-ways-to-save-for-your-child-s-future-1.aspx#ixzz2vgxP3hBB, accessed March 11, 20135. “Financial Aid and Your Savings,” SavingForCollege.com, http://www.savingforcollege.com/financial_aid_basics/financial_aid_and_your_savings.php, accessed March 18, 2014* Janus does not currently offer the 529 College Savings Plan

It’s no secret: college is expensive.The cost of attending a public four-year college has risen 27 percent beyond inflation over the past five years.1 By some estimates, the price tag for tuition and living expenses at an in-state public school could reach as high as $57,609 per year by 2029.2

How are you saving?Keep in mind that your savings account doesn’t have to bear the brunt of these expenses. In fact, putting all your money into one account or investment vehicle can have an undesired effect on your tax planning, as well as hurt your student’s potential to qualify for federal assistance.

You may already be familiar with some of the college investment vehicles available to you, such as the 529 College Savings Plan*, Coverdell Education Savings Account (ESA) and Custodial Accounts, to name a few. An investment in any one of these options is an excellent start but a comprehensive college-investment plan should incorporate careful planning.

$23,410THE AVERAGE COST FOR A PUBLIC, FOUR-YEAR, IN-STATE SCHOOL FOR 2015.3

THE SCENARIOS ON THE NEXT PAGE

HIGHLIGHT A FEW COMMON PITFALLS OF

A SINGLE APPROACH TO COLLEGE

INVESTING AND HOW THEY CAN BE

MITIGATED.

Did you know?For every dollar over $3,000 a student has saved in a checking or savings account in their name, 20 cents is subtracted from federally funded scholarships and grants for which the student would have been eligible.44

ESA OR 529 PLAN

CUSTODIAL ACCOUNT

RETIREMENT ACCOUNT

College Investing Plan u

SCENARIO #1: Your student decides not to attend college.The 529 College Savings Plan and the Coverdell Education Savings Account (ESA) are two of the best-known vehicles for college investing. They feature several tax advantages, including tax-deferred earnings and tax-free withdrawals (for qualified education expenses), making them popular choices.

However, these accounts exist solely for the purpose of paying for education expenses (tuition, books, etc.). What happens if your student decides to forego college and doesn’t need the money you’ve been diligently saving in one of these accounts?

One option may be to transfer the assets to another family member planning to attend college. Otherwise, when you withdraw the funds, you may pay a 10 percent penalty and be taxed on your earnings. In this situation, putting all your savings into one basket could potentially result in a substantial loss of money in taxes and penalties.

SCENARIO #2: You plan to take advantage of student federal aid.To determine how much financial aid a student is eligible to receive, the Free Application for Federal Student Aid (FAFSA) considers factors such as income, assets and expenses to determine your Expected Family Contribution (EFC). This is the amount that the federal government determines you should reasonably be able to pay out-of-pocket for college, with aid covering the rest. The key to maximizing a minor’s potential for financial aid, therefore, is to minimize your EFC. Some investment vehicles can help you do this while others can have the opposite effect.

The assets and income of the student carry more weight in the EFC than those of the parents (20 percent versus 2.6 – 5.6 percent)5. If you put all your savings into an account that is considered the student’s asset, such as a custodial account, you may be significantly hindering his or her chances for federal student aid.

SCENARIO #3: You are not contributing the max to your IRA Using funds from your individual retirement account (IRA) can be a good strategy for paying college expenses. It’s tax-advantaged, shielded from FAFSA’s EFC calculation, and early withdrawals (before age 59½) are not subject to the normal 10 percent penalty if they are used for qualified higher education expenses. And of course, if the student decides not to go to college, your funds are not affected.

However, it’s important to remember that this is money you set aside for your retirement. While your child can borrow for college, you cannot borrow for your retirement. If you rely on your retirement account alone for college savings, you do so at the expense of your own future.

TIP: Consider accounts that are treated as your assets in the EFC, such as a non-taxable account, a 529 Plan, or even your IRA — which is completely excluded from the calculation.

TIP: In addition to contributing to a 529 Plan or Coverdell ESA, consider a strategy that doesn’t require the funds to be spent only on education. This may include a custodial account, non-taxable account, or personal retirement account.

TIP: If you are not already maxing out your IRA contributions but are contributing to a 529 Plan or other minor account, consider diverting part of that contribution to your Traditional or Roth IRA and earmarking it for college. This will allow you to simultaneously save for retirement and college in a way that has tax and financial aid advantages.

u For more information about investing for college visit janus.com/college or call a Janus Representative at 800.525.3713

Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus or, if available, a summary prospectus containing this and other information, please call Janus at 800.525.3713 or download the file from janus.com/reports. Read it carefully before you invest or send money.

Past performance is no guarantee of future results.

This brochure is for information purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security. There is no guarantee that the information supplied is accurate, complete, or timely, nor does it make any warranties with regards to the results obtained from its use. It is not intended to indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are inherent risks that individuals would need to address.

Please consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. More information about municipal fund securities is available in the issuer’s official statement. The official statement should be read carefully before investing.

Investors should consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.

An IRA should be considered a long-term investment. IRAs generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties. Maximum contributions are subject to eligibility requirements. For more detailed information about taxes, consult IRS Publication 590 or a tax advisor regarding personal circumstances.

An ESA should be considered a long-term investment. ESAs generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties. Maximum contributions are subject to eligibility requirements. For more detailed information about taxes, consult IRS Publication 970 or a tax advisor regarding personal circumstances.

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