State Farm® 529 Savings Plan

Kids grow so fast. It's hard to imagine now, but your child's college years will be here in no time. That's why you should give yourself a head start and start now. Begin thinking about your education savings goals and how the State Farm 529 Savings Plan can help you achieve them.

Named after Section 529 of the Internal Revenue Code, a 529 savings plan, provides investors a way to save tax-freefootnote 1 for higher education. The funds can be used at eligible community colleges, trade and vocational schools, universities and graduate schools all across the U.S., and even some abroad.footnote 2 Education savings plans may also be used to pay for tuition at public, private or religious elementary or secondary schools.footnote 2 You can invest for your child, grandchild, niece or nephew or your spouse – even use the funds in your State Farm 529 Savings Plan account for yourself.

With the help of your State Farm registered agent, you can develop a realistic college savings plan based on your risk tolerance, time frame, and personal family and financial situation.

Open an Account today by contacting a State Farm registered agent.

Investment options

Your after-tax contributions will be invested as you choose from a variety of investment options. Things to consider when making your selections include your timeline (or when you'll need to withdraw your money) and your comfort with risk. Learn more about our 529 Savings Plan Investment Options.

 

Federal Tax Benefits

Contributions are made with after-tax dollars, and earnings grow federally tax-deferred while invested and federally tax-free if withdrawn for qualified expensesfootnote 3 such as tuition and fees, required books, supplies, computers and related equipment, and qualified expenses for room and board. Assets in a tax-deferred account may grow more quickly than assets in taxable accounts.

State Tax Benefits*

States may offer state tax or other tax benefits for contributions into the State Farm 529 Plan, sponsored by the state of Nebraska, or any other 529 plan sponsored by another state. The State Farm 529 Plan may be appropriate for those individuals with taxable income in 1) states that offer state income tax deductions, regardless of the state 529 plan into which contributions are made (tax-parity states), or 2) in states that do not have state income taxes (tax-neutral states). Keep in mind, state tax benefits are only one factor in determining if a 529 plan is suitable.

*Investors should consider before investing whether their or their beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program and should consult their tax advisor, attorney and/or other advisor regarding their specific legal, investment or tax situation.

Estate Tax Benefits

Contributions are considered completed gifts and are eligible for the gift tax annual exclusion of up to $18,000 ($36,000 for married couples) per beneficiary from your federal taxable estate or up to $90,000 ($180,000 filing jointly) per beneficiary in a single year, without incurring federal gift tax as long as there is no additional gift to the beneficiary for five years.footnote 4

 

return to reference 3 If assets are not used for qualified expenses, the earnings portion of the withdrawal is subject to federal income tax and may be subject to an additional 10% penalty, as well as, local and state taxes.

return to reference 4 If the account owner dies before the end of the five-year period, a prorated portion of the contribution will be included in his or her taxable estate. If you contribute less than the $90,000 maximum, additional contributions can be made without incurring federal gift taxes, up to a prorated level of $18,000 per year. Federal gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a beneficiary in the year of the contribution.

Eligibility

Open to any individual with a valid Social Security or taxpayer identification number. The beneficiary must also have a Social Security number. There are no state residency requirements, age or income restrictions.

Flexibility

Anyone can open an account regardless of your age, income or state of residence. There are no state residency requirements so you can reside in Illinois, invest in the Nebraska plan, and send your student to an eligible college in California.

You can use funds at virtually any accredited post-secondary public or private school in the U.S. and some abroadfootnote 5 including a university, community college, technical or vocational schools. And, if your beneficiary gets a scholarship or doesn’t need the money, you can change beneficiaries or move money to another beneficiary as long as the beneficiary is a “member of the family.”footnote 6

 

return to reference 5 An eligible educational institution includes accredited post-secondary educational institutions or vocational schools in the United States and some abroad offering credit toward a bachelor’s degree, an associate’s degree, a graduate level or professional degree, or another recognized post-secondary credential.

return to reference 6 A “family member” includes an individual who is a son, daughter, stepson, stepdaughter or a descendant of any such person, a brother, sister, stepbrother or stepsister, a son or daughter of a brother or sister, a brother or sister of the mother, a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law, the spouse of the beneficiary or the spouse of any individual described above, or a first cousin of the beneficiary. For purposes of determining who is a “member of the family,” a legally adopted child or a foster child of an individual is treated as the child of that individual by blood. The terms “brother” and “sister” include half-brothers and half-sisters.

Contributions

There is a low contribution amount – $250 to open an account and $50 ($50 if signing up for an Automatic Investment Plan or a payroll deduction) for subsequent contributions. Anyone can make a contribution into your beneficiary’s account. The total amount of all contributions to accounts in the Nebraska Educational Savings Plan Trust for the same beneficiary may not exceed $500,000.footnote 7

 

return to reference 7 No additional contributions can be made for any beneficiary when the fair market value of all accounts maintained for that beneficiary within all plans offered by the State of Nebraska reaches $500,000. Assets can grow beyond $500,000.

Withdrawals

You may withdraw assets to pay for the beneficiary’s eligible/qualified expenses. If you do not use the assets for qualified expensesfootnote 8 the withdrawal is considered non-qualified. The earnings portion of a non-qualified withdrawal will be subject to ordinary income tax at the recipient's marginal rate and may be subject to an additional 10% penalty.

 

return to reference 8 If assets are not used for qualified expenses, the earnings portion of the withdrawal is subject to federal income tax and may be subject to an additional 10% penalty, as well as, local and state taxes.

Financial Aid

  • Completing the Free Application for Federal Student Aid (FAFSA) is required to determine federal eligibility for needs-based financial aid, as well as, low-interest parent or student loans. FAFSA is also used by colleges and states to assist in determining eligibility for their grants or scholarships.
    • Federal grants and scholarships do not need to be paid back.
    • Parent and student loans must be paid back.
    • The FAFSA must be completed each year for the following academic year.
  • Along with other financial assets (income, investments, savings, etc.), assets in a 529 plan are taken into consideration when determining eligibility for federal financial aid. When calculating the amount the family is expected to contribute (called the Expected Family Contribution, or EFC), ownership is important. For example, parent-owned 529 assets have a lower impact (5.64% of the assets) than student-owned 529 assets (20% of the assets). Parental age can also play a role. To learn more about the impact of 529 assets in the FAFSA calculation, visit www.fafsa.ed.gov.

return to reference 1 If assets are not used for qualified expenses, the earnings portion of the withdrawal is subject to federal income tax and may be subject to an additional 10% penalty, as well as, local and state taxes.

return to reference 2 An eligible educational institution includes accredited post-secondary educational institutions or vocational schools in the United States and some abroad offering credit toward a bachelor's degree, an associate's degree, a graduate level or professional degree, or another recognized post-secondary credential. Education savings plans may also be used to pay for tuition at public, private or religious elementary or secondary schools. Consult your tax advisor to see if your state recognizes K-12 tuition fees as qualified withdrawals under their state income tax.

Risk Disclosures

The State Farm 529 Savings Plan (the "Plan") is sponsored by the State of Nebraska, administered by the Nebraska State Treasurer, as Trustee, and the Nebraska Investment Council provides investment oversight. Union Bank & Trust Company will serve as program manager and Northern Trust Securities, Inc. will serve as distributor. The Plan offers a series of Investment Options within the Nebraska Educational Savings Plan Trust (the "Trust") which offers other Investment Options not affiliated with the Plan. The Plan is intended to operate as a qualified tuition program to be used only to save for qualified education expenses, pursuant to Section 529 of the U.S. Internal Revenue Code.

An investor should consider the Plan's investment objectives, risks, charges and expenses before investing. The Program Disclosure Statement at 36837a.com® which contains more information, should be read carefully before investing.

Investors should consider before investing whether their or their beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program and should consult their tax advisor, attorney and/or other advisor regarding their specific legal, investment or tax situation.

Automatic investment plans do not assure a profit or protect against loss.

Not FDIC Insured* | No Bank Guarantee | May Lose Value
(*Except the Bank Savings Investment Option)

Neither State Farm® nor its agents provide tax or legal advice.

Participation in the Plan does not guarantee that contributions and the investment return on contributions, if any, will be adequate to cover future tuition and other higher education expenses, or that a beneficiary will be admitted to or permitted to continue to attend an eligible educational institution.

This material is provided for general and educational purposes only and is not intended to provide legal, tax or investment advice, or for use to avoid penalties that may be imposed under U.S. federal tax laws. This material is not an offer to sell or a solicitation of an offer to buy any securities. Any offer to sell units within the Plan may only be made by the Program Disclosure Statement and Participation Agreement relating to the Plan.

Nebraska Educational Savings Plan Trust Issuer

Nebraska State Treasurer Trustee

Nebraska Investment Council Investment Oversight

Union Bank and Trust Program Manager

State Farm VP Management Corp. Selling Dealer

Northern Trust Securities Distributor, Member FINRA, SIPC

Account owners do not own shares of the underlying investments, or, in the case of the Bank Savings Investment Option, directly hold a savings account, but rather own an interest in the Individual Investment Options offered by the State Farm 529 Savings Plan.

If assets are not used for qualified expenses, the earnings portion of the withdrawal is subject to federal income tax and an additional 10% federal tax and may be subject to state and local taxes. Qualified higher education expenses include tuition, fees, textbooks, supplies and equipment (including computers) required for enrollment or attendance and certain room and board expenses for the academic term during which the student is enrolled at least half time at an eligible educational institution. Expenses for special-needs students that are necessary in connection with their enrollment or attendance may also be eligible.

If the account owner dies before the end of the five-year period, a prorated portion of the contribution will be included in his or her taxable estate. If you contribute less than the $80,000 maximum, additional contribution can be made without incurring federal gift taxes, up to a prorated level of $16,000 per year. Federal gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a beneficiary in the year of the contribution.

No additional contributions can be made for any beneficiary when the fair market value of all accounts maintained for that beneficiary within all plans offered by the State of Nebraska reaches $500,000. Assets can grow beyond $500,000.

A "member of the family" includes an individual who is a son, daughter, stepson, stepdaughter or a descendant of any such person; a brother, sister, stepbrother, or stepsister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; the spouse of the beneficiary or the spouse of any individual described above; or a first cousin of the beneficiary. For purposes of determining who is a “member of the family,” a legally adopted child or a foster child of an individual is treated as the child of that individual by blood. The terms “brother” and “sister” include half-brothers and half-sisters.

An eligible educational institution includes accredited post-secondary educational institutions or vocational schools in the United States and some abroad offering credit toward a bachelor’s degree, an associate’s degree, a graduate level or professional degree, or another recognized post-secondary credential. See www.fafsa.ed.gov/.

Non-Us residents disclosure:

Each of the investment products and services referred to on the State Farm Mutual Funds web site is intended to be made available to customers or prospective customers residing in the United States. The customer's U.S. permanent residence address must be a street address. This web site shall not be considered a solicitation or offering for any investment product or service to any person in any jurisdiction where such solicitation or offer would be unlawful.

Business Continuity Plan Disclosure for State Farm VP Management Corp.

State Farm VP Management Corp. has developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan.

Contacting Us – After a significant business disruption, if you cannot contact us as you usually do at 1-800-321-7520, you should contact your registered State Farm agent or go to our web site at 36837a.com®.

Our Business Continuity Plan – We plan to quickly recover and resume business operations as soon as possible after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.

Our business continuity plan addresses: data back-up and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and procedures to help ensure that our customers have prompt access to their funds and securities if we are unable to continue our business.

Our business continuity plan may be revised or amended. If changes are made, an updated summary will be promptly posted on our website (36837a.com) or you may obtain an updated summary by calling us at the number below and requesting that a written copy be mailed to you.

Varying Disruptions – Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our firm or a building housing our firm, we may transfer our operations to a local site when needed and expect to recover and resume business within 1 business day. In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and expect to recover and resume business within 3 business days. In either situation, we plan to continue in business, transfer operations if necessary, and notify you through our web site 36837a.com, or our customer number how to contact us. In the unlikely event that the significant business disruption is so severe that it prevents us from remaining in business, our plan provides procedures to help ensure that our customers have prompt access to their funds and securities.

In all of the situations described above, in light of the various types of disruptions that could take place and that every emergency poses unique problems, it may take longer to resume operations during any particular disruption. If you have questions about our business continuity planning, you can contact us at 1-800-321-7520.

Important Information about Procedures for Opening a New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an Account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.


AP2024/02/0271