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529 Savings Plan

MFS 529 Savings Plan was designed to offer you a wide range of investment choices, gifting and estate tax benefits, and quality service. Plus, you get the investment management expertise of MFS® Investment Management.

Tax advantages
Wide range of investment options
Flexibility and control of assets
Gifting and estate planning features
Easy to open and maintain
Benefit for Oregon taxpayers

Tax advantages
One of the key features of 529 college savings plans is tax advantages.
  • Earnings are tax deferred and, if used for qualified higher education expenses are not subject to federal income tax. Withdrawals not used for qualified higher education expenses are subject to both income taxes and a 10% federal tax penalty on earnings. State taxes may also apply.
  • As much as $14,000 ($28,000 for married couples) can be contributed each year without gift-tax consequences as of 2013.
  • Under a special election, up to $70,000 ($140,000 for married couples) can be contributed at one time by accelerating five years’ worth of contributions (as gifts) as of 2013. This feature makes it an attractive estate planning tool for many. Account owner will not incur federal gift taxes as long as he/she does not make any additional gifts to the same designated beneficiary for four years after the year during which he/she makes the one-time gift. In order to do this, the account owner must make an election on a federal gift tax return for the year of the contribution. However, if the account owner elected to treat the gifts as having been made over a five-year period and dies before the end of the five-year period, the portion of the contribution allocable to the remaining years in the five-year period would be includable in computing the account owner’s gross estate for federal estate tax purposes. Account owners should see their tax advisors for more information regarding the gift and estate tax consequences of opening an account.
age based

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Wide range of investment options
With an MFS 529 Savings Plan, you have a variety of investment choices plus three investment paths to take.

1. Age-based investment option
When you select the age-based investment approach, you do not have to worry about switching to a more conservative portfolio as the child approaches college age. It is automatically done for you. This option transfers your assets among four investment options that invest in MFS asset allocation funds that are designed to take into account the approximate number of years before your beneficiary starts college. Then, during the child’s college years, the assets are placed in a conservative bond fund. You will notice that the younger the child, the more aggressive the portfolio. That is because generally they have more time to ride out volatile markets. The principal value of the fund options are not guaranteed at any time. The assets will be exchanged automatically to an investment option which invests in a more conservative MFS Asset Allocation Fund as the designated beneficiary gets older. The funds' objectives and investment strategies change from one age-based model to another.

2. Built-in allocation approach
Offers you an easy way to follow a disciplined diversification investment approach by allowing you to choose the investment option that invests in the MFS Asset Allocation Fund appropriate for you. These built-in allocation strategies automatically allocate, diversify, and rebalance.

3. Customized approach
Design a portfolio from a diversified list of investment options that each invest in one of 18 MFS mutual funds.

U.S. and international stock funds
Bond funds
Money market fund
MFS Asset Allocation Funds

Funds are listed relative to one another within the MFS funds and are not meant to be compared with other portfolios or other types of investments. The three major factors taken into account when listing the portfolios from less aggressive to more aggressive are historical volatility, types of securities in the fund, and diversification permitted within the fund. See the prospectus for detailed explanations and each fund’s objective, policies, strategies, permitted investments, and risks. The investments you choose should correspond to your financial needs, goals, and risk tolerance. For assistance in determining your financial situation, please consult an investment professional. Diversification does not guarantee a profit or protect against a loss.

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Flexibility and control of assets
MFS 529 Savings Plan makes it easy and affordable to invest for college because of its flexible features such as low minimum initial and subsequent investments, high maximum contribution, and a systematic investment program.
  • $250 minimum for initial investment
  • There is no minimum for additional contributions
  • Accepts contributions until account balance reaches $310,000, per beneficiary
  • The MFS Automatic Exchange Plan enables you to dollar-cost average from any MFS fund into any of the MFS 529 Savings Plan investment options
  • Contributions and earnings can be reallocated among MFS fund options once a year, or upon a beneficiary change
  • $25 annual account fee; waived for accounts with assets of $25,000 or more, as well as for Oregon residents
Owner keeps control of assets
  • The person who establishes the account retains control over the assets
  • The person who establishes the account may choose to change the beneficiary

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Gifting and estate planning features
1. Owner may gift $14,000 per beneficiary ($28,000 per married couple) per year without paying federal gift tax as of 2013.

2. Under a special election,up to $70,000 ($140,000 for married couples) can be contributed at one time by accelerating five years’ worth of contributions (as gifts) as of 2013. This feature makes it an attractive estate planning tool for many. Account owner will not incur federal gift taxes as long as he/she does not make any additional gifts to the same designated beneficiary for four years after the year during which he/she makes the one-time gift. In order to do this, the account owner must make an election on a federal gift tax return for the year of the contribution. However, if the account owner elected to treat the gifts as having been made over a five-year period and dies before the end of the five-year period, the portion of the contribution allocable to the remaining years in the five-year period would be includable in computing the account owner’s gross estate for federal estate tax purposes. Account owners should see their tax advisors for more information regarding the gift and estate tax consequences of opening an account.

The MFS 529 Savings Plan makes it easy to open and maintain a gift of education. For as little as $250 you can open an account, and there is no minimum for additional contributions. So it’s smart to let family and friends know about the account so they can invest in the child’s future too.

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Easy to open and maintain
Once you have decided that an MFS 529 Savings Plan is right for you, talk with your investment professional. He or she will help you choose the MFS investment options to fit your needs, as well as assist you with the application. When you complete the process, you’ll find that maintaining the account is seamless.
  • Access account information, such as balances and transactions, online anytime via MFS Access
  • Track daily pricing online by fund symbol online or in the newspaper
  • There is no minimum for additional contributions
  • Ask a specialist questions on the MFS 529 Savings Plan shareholder hotline, 1-866-529-1637

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Benefit for Oregon taxpayers
Oregon taxpayers are eligible for a state tax deduction from Oregon taxable income for contributions to the MFS 529 Savings Plan . For tax year 2013, single contributors qualify for a $2,225  state tax deduction and couples married filing jointly qualify for a $4,455 state tax deduction when they contribute to the MFS 529 Savings Plan. These deduction limits will be adjusted for inflation by the Oregon Department of Revenue. For more information, click here. Note: website only shows JOINT deduction limit.

Oregon law also provides a four-year carry forward state for 2013 tax deduction up. For example, for 2013 if an account owner who is married and filing jointly contributes $20,000, he or she may take a $4,455 state tax deduction that year and carry forward the remaining $15,545 for deduction over the next four years. Oregon state tax deductions taken for contributions to the Plan are subject to recapture under certain circumstances. These deduction limits will be adjusted for inflation by the Oregon Department of Revenues. For more information, click here.

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About the MFS 529 Savings Plan
The MFS 529 Savings Plan is a flexible college investing plan sponsored by the state of Oregon, acting by and through the Oregon 529 College Savings Board and is part of the Oregon 529 College Savings Network. MFS Fund Distributors, Inc. is the Program Manager. MFS 529 Savings Plan accounts are considered municipal fund securities.

Depending on your state of residence and the state of residence of the beneficiary, an investment in the MFS 529 Savings Plan may not afford you or your beneficiary state tax benefits or other benefits only available for investments in such state's qualified tuition program. See your tax advisor to be sure you understand the tax issues related to a 529 plan. Withdrawals of earnings not used to pay for qualified higher education expenses are subject to an additional 10% federal tax penalty. State taxes may also apply.

There is a $25 annual account fee associated with the MFS 529 Savings Plan. This annual fee is waived for Oregon residents and for those accounts with assets of $25,000 or more. Investments in 529 plans involve investment risks. You should consider your financial needs, goals, and risk tolerance prior to investing.

Before investing in the MFS 529 Savings Plan, consider the investment objectives, risks, charges, and expenses. For a prospectus or summary prospectus containing this and other information, as well as a Participant Agreement and Disclosure Statement and Expense Supplement, contact MFS or view online at mfs.com. Read it carefully.

MFS does not provide legal, tax, or accounting advice. Individuals should not use or rely upon the information provided herein without first consulting with their tax or legal professional about their particular circumstances. Any statement contained in this communication (or elsewhere on this web site) concerning U.S. tax matters was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. This communication was written to support the promotion or marketing of the transaction(s) or matter(s) addressed.

 

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