2009-2010 EDITION

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National College Savings Program

North Carolina

Having removed its state residency requirements in early 2005, this 529 savings program is now open to residents of any state. The age-based option uses Vanguard mutual funds, while each of the static options employs its own unique investment strategy. A federally-insured deposit option was made available in 2010.

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(Non-Resident Rating)

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General

Did you know?

Residents are not limited to investing in their own State's plan. Another state may offer a plan that performs better and has lower fees. If there is no tax break offered for in-state investors... shop around!

Also, the plan chosen does not affect which state the student enrolls in. An investor can live in NY, invest in a plan from NV and send a student to college in FL.

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Program type:

Savings

How to enroll:

Enroll directly with the program.

Initial year of operation:

2001

State agency(ies):

North Carolina State Education Assistance Authority

Program manager:

College Foundation, Inc.

Program distributor:

College Foundation, Inc.

Manager contract term:

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Eligibility

State residency requirements:

None

Who can be a participant/owner in the program?

Individuals at least 18 years old, emancipated minors, UGMA/UTMA custodians, and legal entities

Significant time or age restrictions imposed by the program:

None

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Contributions

Maximum contributions:

For 2010, accepts contributions until all account balances in the NC 529 plan for the same beneficiary reach $382,032.

Minimum contributions:

The minimum initial contribution is $25 and the minimum subsequent contribution is $25.

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Investment Options

Age-based investment options:

The V Fund Age-Based Option offers a choice among three different risk levels (Aggressive, Moderate, or Conservative), each containing five portfolios of underlying Vanguard mutual funds. Contributions are placed into the portfolio corresponding to the selected risk level and number of years to expected enrollment, and later reassigned to more conservative portfolios until the beneficiary reaches age 19.

Static investment options:

Select among a 100% equity portfolio (The Active Core Equity Fund), a fixed-income portfolio (The Dependable Income Fund), eight individual-fund portfolios (The V Fund Individual Investment Options), and a federally-insured deposit account through State Employees' Credit Union. An equity-indexed investment, the Protected Stock Fund, was closed to new investments on February 27, 2008.

Underlying investments:

The V Fund Age-Based option offers a choice between Aggressive, Moderate or Conservative tracks all of which invest in Vanguard mutual funds. Eight V Fund options are offered as individual options. The Aggressive Stock Fund is invested 100% in NCM Capital's Focused Equity Discipline. The Dependable Income Fund uses the state treasurer's short-term investment portfolio. The Federally-Insured Deposit Account guaratees principal and pays interest. The Protected Stock Fund (now closed to new investments) is invested in a funding agreement issued by MetLife that guarantees principal plus the greater of a minimum annualized interest rate or 70% of the five-year price appreciation, excluding dividends, of the S&P 500 Index.

Underlying fund allocations:

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Investment performance link:

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Portfolio Fees & Performance Lookup

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Fees & Expenses

Enrollment or application fee:

None

Account maintenance fee:

None

Program management fees:

0.25%

Expenses of the underlying investments:

Active Core Equity Fund: Approximately 0.65%

NC Treasurer Dependable Income Fund: Less than 0.05%

V Fund Options: Approximately 0.06% to 0.32%

Federally-Insured Deposit Account: None

Total asset-based expense ratio:

<0.25% - 0.90%

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Taxes and other Benefits

Program match on contributions:

None

State tax deduction or credit for contributions:

Contributions to the North Carolina 529 plan, including rollover contributions, of up to $2,500 per year for an individual taxpayer, and $5,000 per year for married taxpayers filing a joint return, are deductible in computing North Carolina taxable income. Beginning in 2012, income limitations are imposed.

Value of in-state tax benefits:

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State tax recapture provisions:

The principal portion of rollovers and nonqualified withdrawals from this plan are included in North Carolina taxable income to the extent of prior North Carolina tax deductions. Nonqualified withdrawals for this purpose do not include withdrawals made as the result of the beneficiary's death or disability.