Get to know Scholars Choice – "Among the Best"
Now that it’s "Back to School" season, many people start thinking about saving for college. But they may not realize that 529 college savings plans aren’t just for kids. A beneficiary of a 529 plan can be of any age – a mid-career professional, or even a retiree.
Consider these two scenarios where an adult might benefit from opening a 529 college savings plan and making himself or herself the beneficiary. The contributions grow tax-deferred, and withdrawals for qualified tuition expenses are free from federal taxes. There may also be estate-planning benefits (with certain limitations).
| 1. | A career-driven professional Mary has been in the work force for five years. She's always planned to pursue a law degree. When her grandfather left her an inheritance, she decided to take action. She deposited $200,000 in a 529 college savings plan for herself and allowed it to grow tax-deferred for four years.¹ That fall, she started night classes at a local university. |
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| 2. | An active retiree Sam is a 60-something retired accountant with a passion for golf. He learned that he could use 529 withdrawals to pay for certain golf programs at accredited schools. He opened an $80,000 account for himself and used it to pursue a degree in professional golf management at a state university. |
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Of course, 529 college savings plans are a compelling option for another group of adults: grandparents, aunts and uncles, or any other family and friends who would like to help a "budding scholar" of tomorrow.² Talk to your financial advisor to learn how you or your loved ones may benefit from a 529 plan.
5 Steps to Saving for College
Scholars Choice brochure
Why Scholars Choice? 5 Reasons
| 1. | Rated "among the best" by Morningstar For the fourth year in a row, Morningstar has named the program one of the best 529 plans in the country. View article |
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| 2. | Smart portfolio construction At Legg Mason, our portfolio construction is based on simulating thousands of possible risk and return scenarios and forecasts over multiple hypothetical future time periods. We believe our thorough and sophisticated approach helps produce stronger portfolio options for all of your clients. |
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| 3. | Careful manager selection We have a history of choosing experienced managers. At Legg Mason, we handpick portfolio managers based upon meticulous screening, including in-depth reviews of process, performance and people. |
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| 4. | Vigilant portfolio monitoring Responsible asset management requires ongoing due diligence. At Legg Mason, we continually monitor managers and underlying fund performance, ensuring trades are handled correctly and asset weights are properly maintained. |
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| 5. | Industry ratings Our strong industry ratings are another reason to invest in Scholars Choice. Morningstar rated the plan among the best college savings plans four years Running.³ Savingforcollege.com has awarded Scholars Choice with 4.5 caps out of 5 for in-state Colorado residents; and 3.5 caps for out-of-state residents.4 |
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1. The earnings portion of a non-qualified withdrawal is subject to federal income taxes and any applicable state and local income taxes, as well as an additional 10% federal tax.
2. Annual limit for gift tax exclusion: $60,000 ($120,000 for married couples) per beneficiary in a single year, if elect to treat as gift spread over five years.
3. An analysis prepared and based on the opinions and judgments of Morningstar, an independent investment research company. Morningstar analysts evaluated over the
one year period: 70 529 College Savings Plans (28 advisor-sold and 42 direct-sold) in 2008; 83 529 College Savings Plans (34 advisor-sold, 46 direct-sold, 3 advisor and direct-sold) in 2007; 89 plans (26 advisor-sold plans, 63 direct-sold) in 2006; and 81 plans (33 advisor-sold, 45 direct-sold, 3 advisor and direct sold plans) in 2005. Morningstar evaluated each plan and its underlying investments based on the
following factors as of 12/31 of 2007, 2006, 2005, and 2004: costs, quality of underlying investments, and flexibility of investment options. Additionally, in 2005, asset allocation
and portfolio construction were factored. In 2006, clarity of PDS, diversification and asset allocation were factored and in 2007, diversification was factored. For each plan and its underlying investments that were evaluated, Morningstar assigned a relative grade (e.g., good, average, poor) for each factor. By analyzing and combining the factor grades, the Morningstar analysts determined what they thought were the "best" and "worst" 529 plans. Out of the plans evaluated by Morningstar, Colorado's Scholars Choice Plan was identified as being among the top five plans (the "best" list) in 2008 and 2007, and among the top three in advisor-sold plans in 2006 and 2005. (Source: Morningstar, www.morningstar.com, April 2008, March 2007, February 2006 and 2005.)
4. Savingforcollege.com as of 6/30/08: The "5-Cap Ratings" represent the overall usefulness of a state's 529 plan based on many factors, e.g., high contribution maximums and low minimums, wide eligibility standards and ability to use account for all qualified higher education expenses. The 4.5 cap rating for in-state Colorado residents is considered an excellent program with many benefits for the participant and positive investment attributes. Also, the program rated 3.5 caps for out-of-state residents. Please note that our 5 cap ratings can change at any time and without warning.
An investor should consider the Program's investment objectives, risks, charges and expenses before investing. The program disclosure statement at www.scholars-choice.com, which contains more information, should be read carefully before investing. If an investor or an investor's beneficiary is not a Colorado taxpayer, they should consider before investing whether their home states offer 529 Plans that provide state tax and other benefits only available to state taxpayers investing in such plans.
Legg Mason, Inc., its affiliates and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the "promotion or marketing" of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.
Scholars Choice© is a registered service mark of CollegeInvest. CollegeInvest and the CollegeInvest logo are registered trademarks. Administered and issued by CollegeInvest. Legg Mason Global Asset Allocation, LLC, Investment Manager. Legg Mason Investor Services, LLC is the primary distributor of interest in the Program. Legg Mason Global Asset Allocation, LLC and Legg Mason Investor Services, LLC are Legg Mason Inc affiliated companies.
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