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Mutual funds offer you a diversified investment vehicle without requiring a great deal of money. Your investment and those of other investors with similar objectives are pooled to purchase securities.
A professional manager closely monitors the securities held within a fund portfolio to determine if they're meeting the objective of that fund. They buy and sell securities in an effort to get the best return for investors while maintaining that objective. There's usually a fee charged by fund companies for the manager's services. Those fees are normally a fraction of what it would cost you to make stock or bond purchases independently. See the prospectus for complete information regarding fees.
Selecting a mutual fund is easy with these three steps:
Yes. Although diversification may help your portfolio, it doesn't assure a profit or protect against loss in a declining market. Over-diversification can dilute your investment results and hinder progress towards achieving your goals.
You need to find a balance between returns and risk with a select number of funds appropriate for your personal financial needs.
A transfer is a movement of funds between like-type plans (e.g., IRA to IRA, SEP to SEP, Roth IRA to Roth IRA).
A rollover is generally a movement of funds from one type of plan (e.g., 401k) to another type of plan (e.g., IRA).
A 529 Savings Plan is a program that allows participants to invest in a special account designated for qualified higher education expenses. 529 savings plans offer a rate of return that depends on the performance of the plan's investments. As such, the value of a 529 savings plan account may increase or decrease over time.
A prepaid tuition plan allows parents, grandparents, and others to lock in today's tuition rates. The program will pay out future college tuition at any of the state's eligible colleges or universities (or make a payment to private and out-of-state institutions).
If the beneficiary of an account dies or becomes disabled, you are entitled to receive the balance in your account. Investment earnings will be taxed at your ordinary income rate. No federal penalty tax will be assessed and the trust will not assess a contingent deferred sales charge. You may also transfer the balance tax-free to an account for another beneficiary who is a qualified family member.
If your beneficiary elects not to pursue post-secondary education, you may either transfer the account balance to an account for another beneficiary who is a qualified family member or withdraw the principal and investment earnings in a non-qualified withdrawal.
Institutions of higher education include:
Institutions must also be eligible to participate in U.S. Department of Education student aid programs.
Withdrawals from an account may be used to pay higher education costs for a designated beneficiary. These include tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible institution of higher education. They also include the reasonable costs of room and board for the beneficiary who is at least a half-time student. The cost of room and board qualifies if it is not more than the greater of the following two amounts:
Yes. It is a non-qualified withdrawal unless it is one of the following situations:
The earnings portion of a non-qualified withdrawal is treated as income to the distributee and is subject to federal tax, applicable state income tax, an additional 10% federal tax, and any contingent deferred sales charges assessed by the servicing agent.
The eligibility of the beneficiary for financial aid may depend upon:
These policies vary at different institutions and can change over time. Therefore, no person or entity can say with certainty how the federal or state aid programs or the school will treat your account.
Note: Financial aid programs administered by agencies of the state of Nebraska don't take account balances into consideration, except as provided by federal law.
If the designated beneficiary receives a scholarship or other financial aid, they may no longer require all the funds in the account.
IRS Publication 970 indicates that you may withdraw funds from your account up to the amount of the scholarship or other financial aid. The earnings portion of the withdrawal is included in your ordinary income, but no federal penalty tax is assessed. The trust is not assessed a contingent deferred sales charge if the aid is a scholarship, allowance, or payment described in section 25A(g)(2) of IRS code.
You may also transfer the amount withdrawn in a qualified rollover distribution and no amount of the withdrawal will be included in your income.
You may contribute up to $2,000 annually to a child's Coverdell ESA if your modified adjusted gross income is less than the following in the tax year you contribute:
The $2,000 maximum contribution limit is gradually reduced if your modified adjusted gross income exceeds these limits.
Anyone, including the account beneficiary, may contribute to the Coverdell ESA, as long as their income falls within the income guidelines and the total of all contributions for one beneficiary does not exceed the $2,000 annual limit.
The annual amount you can contribute to a Coverdell ESA is dependent on your modified adjusted gross income on your federal income tax return. The following table should help you determine your Coverdell ESA contribution eligibility.
|Tax Year 2018||Modified Adjustable Gross Income|
|Tax Filing Status||Full Contribution||Partial Contribution||Not Eligible|
|Up to $95,000||$95,000 - $110,000||Above $110,000|
|Married filing jointly||Up to $190,000||$190,000 - $220,000||Above $220,000|
Investing involves risk, including potential for loss.
Target-date portfolios have investment objectives that are adjusted over time to be more conservative as the target date (date the investor plans to start withdrawing their funds) approaches. The principal value of the fund(s) is not guaranteed at any time, including at the target date.
Diversification, automatic investment plans, and dollar cost averaging do not assure a profit or protect against loss.
Bonds are subject to interest rate risk and may decline in value due to an increase in interest rates.
Valores distribuidos por State Farm VP Management Corp.
Before investing in a 529 plan, consider the plans investment objectives, risks, charges, and expenses. Contact the plan issuer for an official statement containing this and other information. Read it carefully.
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.
Los valores no están asegurados por la FDIC, no están garantizados por el banco y están sujetos a riesgos de inversión, incluyendo la posible pérdida del principal.