Administrative Fee |
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A charge for expenses incurred in the administration of a 529 college savings plan, which may include services such as record keeping, auditing, and preparing and printing statements and reports. This fee is deducted from your holdings based on a percentage of your assets in the plan. |
| Age-Based Portfolio |
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College savings plan portfolios that change their asset allocation according to the beneficiary's age. Initially age-based portfolios invest primarily in stock funds. As the beneficiary grows older, the stock funds are replaced by more conservative investments such as bond funds. |
| Annual Maintenance Fee |
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Most 529 college savings plans charge annual maintenance fees. These fees usually range from $10 to $50. Many plans reduce or eliminate this fee for residents, if you make automatic contributions, or if you maintain a certain balance, typically $25,000. |
| Breakpoints |
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529 college savings plans with front-end loads or sales charges may enable you to reduce front-end sales charges as the amount of your investment increases to certain levels called "breakpoints." Check the disclosure statement or plan description to see if a breakpoint will reduce the front-end sales charge. |
| Class |
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A single 529 college savings plan or mutual fund may offer more than one "class" of shares to investors. Each class represents a similar interest in the plan's or fund's portfolio, but has different fees and expenses. Here are the basic definitions of Class A, B, and C shares:
- Class A Shares - These shares typically charge a front-end sales charge that is deducted from the initial investment.
- Class B Shares - These shares typically do not charge a front-end sales charge. So, unlike Class A shares, all your money is immediately invested. Class B shares normally impose a contingent deferred sales charge (CDSC). The CDSC normally declines each year and is eliminated after a number of years. Class B shares often then "convert" into Class A shares. When they convert, they will begin to charge the same annual fund operating expenses as Class A shares. Before they convert, Class B shares usually have higher annual fund operating expenses than Class A shares.
- Class C Shares - These shares typically do not charge a front-end sales charge. So, unlike Class A shares, all your money is immediately invested. Often Class C shares impose a small charge if you sell your shares within a short time of purchase, usually one year. Class C shares also typically impose higher annual fund operating expenses than Class A shares.
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| Contingent Deferred Sales Charge (CDSC) |
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A common type of deferred sales charge in some 529 college savings plans and mutual funds. The CDSC normally declines each year and is eliminated after a number of years. |
| Convert |
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Sometimes a share class will convert to another class of shares after a period of time. This means that you will begin to pay the fees and expenses charged by the class to which your plan or fund was converted. |
| Deferred Sales Charge (Back-End Load) |
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A deferred sales charge or contingent deferred sales charge (CDSC) is a charge you pay when you withdraw money from a 529 college savings plan or in an investment option within the plan. It is sometimes referred to as the back-end load. The charge may start out at 2.5% for the first year, and get smaller each year after that until it reaches zero. Not every college savings plan has a deferred sales charge. In some plans, a deferred sales charge also may be levied on certain classes of the plan. |
| Direct-Sold and Broker-Sold Plans |
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"Direct-Sold College Savings Plans" - You buy an interest in the college saving plan directly from a
broker-dealer on behalf of the state, the state that sponsors the plan, or from the plan's program
manager, with no sales person involved.
"Broker-Sold College Savings Plans" - You buy an interest in a college saving plan through an invest-
ment adviser, brokerage firm, or bank, generally paying a sales load or fee. Purchasing through
a broker, you may be able to reduce the front-end load for purchasing Class A shares if you invest
above certain threshold amounts (breakpoint discounts). |
| Disclosure Statement or Plan Description |
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Similar to a mutual fund's prospectus, a 529 college savings plan's disclosure statement or plan description (these terms are interchangeable) provides detailed information about the plan, including investment options and fees and expenses. |
| Distribution |
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Distribution refers to a withdrawal from a 529 plan account, consisting of both earnings and principal. |
| Enrollment Fee |
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The fee assessed when you enroll in a college savings plan. |
| Foregone Earnings |
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Foregone earnings is the amount you could have earned on your investment if the money spent on fees and expenses was invested. The expense analyzer calculates foregone earnings by taking the money used to pay fund fees and expenses and compounding it at the rate of return you selected. Deferred sales charges are not included in this calculation because you only pay them when you sell the investment.
By purchasing and holding any mutual fund, investors will incur some level of fees and expenses. This figure should primarily be used to compare the opportunity cost of sales charges and expenses across mutual funds. |
| Management Fee |
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A charge paid to the 529 college savings plan's managers for their services, which may include compensation for advising you about the plan as well as marketing expenses. The fee is based on a percentage of your assets in the plan. |
| Mean and Median |
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The mean is the average of several values. The mean value is calculated by adding up all the values and dividing by the number of values in the set. The median is the middle value in a set of data. |
| Plan Type: Prepaid |
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This type of 529 plan allows parents, grandparents, and others to lock in today's tuition rates for a future student beneficiary at any of a state's eligible public colleges or universities, avoiding future tuition increases. Prepaid tuition plans are guaranteed to increase in value at the same rate as college tuition. So, if you purchase shares worth one semester of tuition at a state college, those shares will always be worth one semester of tuition, even 10 years later when tuition rates have doubled.
There are usually residency requirements and no investment options. |
| Portfolio |
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The set of mutual funds in which assets in the investment options are invested in accordance
with the asset allocation adopted by the Bank. An Account is assigned to a Portfolio based upon the selections made by the Participant. |
| Plan Type: Savings |
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This type of 529 plan allows you to invest in various mutual fund portfolios or other investments on a tax-deferred bases, and to pay college or graduate school expenses with tax-free withdrawals. Many states now offer at least one college savings plan that has no residency restrictions. |
| Qualified Withdrawals |
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Any withdrawals from a college savings account that are used at eligible schools for college-related expenses. These withdrawals are tax-free and cover expenses such as tuition, room and board, book and supplies, and other equipment intended for college use. |
| Sales Charge (Front-End Load) |
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Several college savings plans charge a sales charge when you buy certain investment options within a plan or purchase a plan through a broker or investment adviser instead of directly from the state. For example, suppose you want to spend $10,000 to purchase a 529 plan, and the plan imposes a front-end sales charge of 5%. You will be charged $500, and you will receive an investment with a market value of $9,500. Some plans may provide a discount if you:
- Want to make a large purchase
- Already hold other mutual funds offered by the same fund family
- Commit to regularly purchasing the mutual fund's shares.
- Have family members (or others with whom you may link according to fund rules) who hold funds in the same fund family.
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| Section 529 |
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Section 529 of the Internal Revenue Service Code, the section that specifies the requirements for qualified tuition college savings programs (529 plans). |
| Total Fees |
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The total of sales charges, management or marketing fee, administration or administrative fee, underlying fund expenses, and other expenses and fees charged by a 529 college savings plan over the time period you selected. |
| Total Sales Charges |
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The total of any front-end sales charges (front-end load) or deferred deferred sales charges sales charges. |
| Underlying Fund Expenses |
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Because 529 college savings plan portfolios typically invest in a number of funds, they bear part of the fees and expenses of these underlying funds. This expense is expressed as a percentage of a fund's assets. These are fees you do not directly pay, but which are taken out of the fund's assets. Fund expenses include:
- Management Fees - These fees include amounts paid to the fund's investment advisor for managing the fund's portfolio and providing other services, such as shareholder record keeping and preparing shareholder statements and reports.
- 12b-1 Fees - Named after a Securities and Exchange Commission (SEC) rule, these fees include costs of distributing the fund shares to investors.
- Other Expenses - These expenses include any other annual fund expenses.
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