New Amsterdam Life, Inc.

Copyright 2011 All Rights Reserved

Did You Know?

Since 1978, the price of tuition at US colleges has increased over 900% The 10-year average annual tuition increase is approximately 6%
In 2028, the cost of a 4 year private college would be $340,800 In 2028, the cost of a 4 year public university would be $95,000

These numbers do not include room and board, books, supplies, equipment or transportation!

Did You Know?

Did You Know?

Total U.S. student loan debt will top $1 trillion in 2011 more than total U.S. credit card debt

Did You Know?

Under federal law, student loans usually CANNOT be discharged in a bankruptcy Within 3 years of graduation, more than 1 out of 8 students have DEFAULTED on their student loans!

Know Your Options

5 2 9 Pl n s a Pre -Pa i Tu i o n P l n s d ti a C o ve rd e l l n s lP a R e w a rd s, R e b a te Pro g ra m s S a vi g s B o n d s, C D s n B a n k / B ro ke ra g e A cco u n ts H om e Equi ty R e ti m e n t S a vi g s re n J ve n i e Li I su ra n ce u l fe n

What is a 529 Plan?

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs.

There are two types of 529 plans: Prepaid Tuition Plans 529 College Savings Plans

Advantages of Pre-Paid Tuition Plans

Lock in tuition at current rates Better rate of return than bank savings accounts or CDs No risk to principal, guaranteed by the state Anybody can contribute, including grandparents and friends of the family

D i d va n ta g e s o f Pre p a i sa d Tu i o n P l n s ti a
Weak return on investment Non-qualified withdrawals are taxed as ordinary income, plus a 10% tax penalty. Lacking creditor protections (for owner/beneficiary) Account owner/beneficiary must be a state resident Lower maximum contributions Limited to tuition and fees (not room and board) Tax benefits typically limited to in-state

 Tax-deferred growth and tax-free withdrawals State income tax deductions in many states (e.g., NY) Favorable estate and gift tax treatment Low impact on financial aid eligibility High cumulative contribution limits No restrictions on choice of college Flexible investment options

Advantages of 529 College Savings Plans

Disadvantages of 529 College Savings Plans

No lock on tuition rates Restricted use of funds for qualified expenses Only for qualified institutions Non-qualified withdrawals are taxed as ordinary income, plus a 10% tax penalty. Lacking creditor protections (for owner/beneficiary) No guarantees Market risk High expenses and sales charges

What are Coverdell Accounts?

Coverdell accounts are trusts created exclusively for the purpose of paying the qualified education expenses of the designated beneficiary of the trust. They are exempt from federal taxation. Contributions are phased out for incomes between $95,000 and $110,000 (single filers) or $190,000 and $220,000 (married filing jointly).

Advantages of Coverdell Plans

No investment limitations/restrictions Includes primary, secondary, and postsecondary education expenses plus tuition, room and board, transportation and computers.

Disadvantages of Coverdell Accounts

Contribution limit of $2000 per child, per year Money must be used by the time the child reaches age 30 or the earnings will be taxed as ordinary income plus a 10% penalty Contributions are not deductible on federal or state income tax, but earnings accumulate tax-free. Contribution limits drop to $500 in 2013

Ten Commandments of College Savings

1 . S ta rt N o w ! 2 . M a k e a B u d g e t! 3 . R e w a rd Y o u rse lf 4 . P la n fo r S ch o la rsh ip s 5 . P la n F o r F in a n cia l A id 6 . It Is C h e a p e r to S a v e T h a n to B o rro w 7 . It Is B e tte r to G iv e T h a n R e ce iv e ( a t le a st u n til 2 0 1 3 ) 8 . P la y It S a fe 9 . D o n t P u t A ll Y o u r E g g s in O n e B a sk e t 1 0 . It Is N e v e r To o L a te !

The First Commandment Start Now!

The sooner you start, the less you'll need to save each year in order to reach your goal. Investing a fixed amount of money at regular intervals (e.g., once a week, once a month) gets you the benefit of dollar cost averaging Assuming a 7% return on investment, saving $200 a month from birth would yield almost $80,000 by age

The Second Commandment Make a Budget!

Create a monthly budget that reflects your actual spending habits Try to identify living expenses you can cut Any time you cut your expenses, use the money toward savings Set a goal and track your progress

The Third Commandment Reward Yourself!

BabyCenter UPromise BabyMint Cash Back Reward Credit Cards SAGE Tuition Rewards Program

The Fourth Commandment Plan for Scholarships

Create a scholarship folder of all academic and extracurricular accomplishments Speak to guidance counselor Check with employer, fraternal and religious organizations, military, school admissions/financial aid, scholarships.com Hope Scholarship Credit Federal income tax credit of up to $2,500 Income limits apply Lifetime Learning tax credit Federal income tax credit of up to $2,000 Income limits apply

The Fifth Commandment Plan for Financial Aid

2/3 of all full-time undergraduate students receive some kind of financial aid. Even if you think you wont qualify, apply! Visit fafsa.com Average aid for a full-time undergraduate student was about $11,500, including $6,000+ in grants that dont have to be repaid. Types of Financial Aid:
Scholarships and grants Student loans Federal Work-Study aid

 When you save, the money earns interest; when you borrow, you're the one paying the interest Borrow only what you need Shop Around If you must borrow, remember you can deduct up to $2,500 in interest even if you dont itemize

The Sixth Commandment It is Cheaper to Save Than to Borrow

The Seventh Commandment

Its Better to Give Than Receive (Until 2013)
You can give up to $13,000 ($26,000 for a married couple) per person per year without incurring a gift tax or needing to report the gift on a tax return In 2011-2012, $5 million of assets can be transferred out of an individuals estate without any gift tax dropping to $1 million in 2013 For 529 plans, you can give up to $65,000 per person in a single year ($130,000 for a married couple through gift-splitting) without triggering a gift tax

The Eighth Commandment

Diversify, Diversify, Diversify!
Asset Class Asset Manager

Dont Put All Your Eggs in One Basket

Very few managed funds outperform stock market indexes on a long-term basis Make a list of all your savings/investments
Set reasonable financial goals Track performance Hold your financial professionals accountable

The Ninth Commandment Play It Safe!

Begin with an aggressive strategy, and switch to a more conservative strategy with new money when college comes closer Review/Rebalance your asset allocation every year dont time the market You'll need to earn at least 7% to 8% after taxes in order to keep up with increases in college costs

The Commandment It Is Never Too Late!

It is never too late (and it is never too early) to start saving for college every dollar you save is a dollar less you have to borrow Dont get caught up with school rankings your kids can get a quality education without incurring a lifetime of debt

th 10

What is Juvenile Life Insurance?

Juvenile life insurance is a flexible financial product that insures the life of a child. Juvenile life insurance provides cash value accumulation, taxadvantaged growth and guaranteed insurance for life.

Why Juvenile Life Insurance For College?

Huge tax advantages Performance guarantees Flexible contributions Cash available at any time for any purpose Less volatility Does not impact federal financial aid Anyone can contribute Creditor protections Guaranteed insurance and lifetime savings

New Amsterdam Life College FirstSM Plan

$5 a day can grow to $51,634* $10 a day can grow to $107,665* Provided by Penn Mutual (A+ rating) Families choose the College FirstSM Plan because of: Flexible payments Tax advantages Insurance for life Options Equity Exposure + Performance Guarantees

* Assuming 8% average annual returns

Questions? More Information?

James Garfinkel 1 - 866 - 881 - 6202

James@newamsterdamlife . com