Understanding the “Account” in Children’s Savings Accounts May 16, 2017 www.savingsforkids.org
Welc lcome Monica Copeland Senior Program Manager Children’s Savings CFED www.savingsforkids.org
Housekeepin ing • This webinar is being recorded and will be available online and emailed to those who registered • All attendees are muted to ensure sound quality • Ask a question any time by typing the question into the text box of the GoToWebinar Control Panel • If you experience any technical issues, email gotomeeting@cfed.org www.savingsforkids.org
About CFED Our mission at CFED is to make it possible for millions of people to achieve financial security and contribute to an opportunity economy. www.savingsforkids.org
How We e Do o It We push to expand innovative practical solutions that empower low- and moderate-income people to build wealth. We drive policy change at all levels of government. We support the efforts of community leaders across the country to advance economic opportunity for all. www.savingsforkids.org
Goals ls of f th the Webin inar • Provide a high-level overview of the account types used for CSA programs • Provide examples of how different financial institutions are working with current CSA programs in order to expand children’s savings www.savingsforkids.org
Webin inar Overvie iew • Background information • CSAs • Account considerations • Presentations • Hastings City Bank (HCB) • Utah Educational Savings Plan (UESP) • Questions and Answers • Resources www.savingsforkids.org
Presenters www.savingsforkids.org
Background - What Are CSAs? • Long-term savings or investment accounts for children (0-18) • Usually used for postsecondary education expenses • Provide incentives to build savings (e.g., seed deposit and matches) • Account withdrawals are restricted www.savingsforkids.org
Account Components • Type of financial institution • Bank • Credit union • 529 plan provider • Back-end structure • Account set-up • Program coordinator interactions • Participant experience • Participant interactions with account www.savingsforkids.org
Key Account Features For Program Coordinators For Participants • Ability to open large numbers • No SSN or ID required to of accounts at a time open account • Ability to provide account • Multiple deposit options activity reports • Ability to track accounts & • System for differentiating incentives between participant deposits • Interest-bearing or & incentive funds investment growth potential • Custodial or trust accounts • Account funds do not count held by a third party towards asset limits for public • benefits No/low fees for CSA program www.savingsforkids.org
Account Custodia ian • Purpose • Enable automation and scale • Open accounts on behalf of minors • Secure savings • Protect families from asset limits • Key attributes • Trusted by families • Able to make long-term commitment • Same as program coordinator or different organization www.savingsforkids.org
Addit itio ional Account Details For more information on accounts, review CFED’s CSA guide, Investing In Dreams: A Blueprint for Designing Children’s Savings Account Programs http://bit.ly/InvestingInDreams www.savingsforkids.org
www.savingsforkids.org
About Hastings Cit ity Bank • Founded in 1886 • Based in Hastings, Michigan • I nterest in Children’s Savings Accounts (CSAs) • Introduction to Kickstart to Career • FDIC Youth Pilot www.savingsforkids.org
Partnership ip wit ith Kic ickstart to Career • Developing program with CSA partners • Financial education • Marketing www.savingsforkids.org
Account Specif ifics • Type of account at the bank • Data sharing • Account opening process • Initial & incentive deposits • Public and private funds • Account packets • Deposit options • Withdrawal process • Account contact • Reporting data to Foundation www.savingsforkids.org
Websit ite www.savingsforkids.org
Lessons Learned • Successes • Challenges • Recommendations www.savingsforkids.org
Contact Nancy Goodin, CFMP Assistant Vice President, Marketing Director ngoodin@hcb.us Dawn Braden Retail Operations Manager dbraden@hcb.us www.savingsforkids.org
Children’s Savings Account Provider CFED Webinar Series May 16, 2017
Why a 529 College Savings Plan? A 529 plan is an investment account designed specifically to encourage saving for the higher education expenses of a beneficiary. Benefits • Investment options with opportunity for growth • Earnings grow tax-free and withdrawals are tax-free when used for qualified higher education expenses • Exposure to saving and investment principles can augment program curriculum 22
About UESP UESP is a nonprofit public entity responsible for the fourth-largest direct-sold 529 plan in the nation. • $10.6 billion in assets • 339,000 accounts nationwide • Highest rating by Morningstar Inc. • Provides its own program management Committed to developing a college-bound identity in children while helping families save. 23
CSA Program Support UESP Support of CSA programs began with the “I Have A Dream” Foundation in 2012 CSA Platform • Scalable to program size • Simple account signup with automatic program affiliation • Incorporates incentives • Tracks account data and provides reporting 24
CSA Account Structure 25
Program Account Attributes Scholarship Account • Each account has one beneficiary • Contributions are invested in a default option • Program sponsor controls the contributions and withdrawals Family-Owned Account • Account owner must be at least 18 years old • Contributions can be made by check, money order, online bill pay/bank transfer, or payroll deduction • Family contributions can be a requirement for matching incentives 26
UESP Supports Programs Nationwide 27
Considerations for New CSA Program Sponsors 1. What are the program features and objectives? 2. What program administration roles will be required? 3. Which CSA model should be used, e.g. scholarship or family-owned accounts? 4. How will the account opening process be facilitated with families? 5. What activities or criteria will trigger account funding? 6. What data reporting will be necessary to manage the program? 7. What are the withdrawal requirements, and what will the process look like? 28
Important Legal Notice • Read the UESP 529 Program Description for more information and consider all investment objectives, risks, charges, and expenses before investing. Call 800.418.2551 for a copy of the Program Description or visit uesp.org. • Investments in UESP are not guaranteed by UESP, the Utah State Board of Regents, the Utah Higher Education Assistance Authority, or any other state or federal agency. However, Federal Deposit Insurance Corporation (FDIC) insurance is provided for the FDIC-insured accounts. Please read the Program Description to learn about the FDIC-insured accounts. Investments could lose value. • Non-Utah taxpayers and residents should determine whether the state in which they or the beneficiary pays taxes or lives offers a 529 plan that provides state tax or other benefits not otherwise available by investing in UESP. All investors should consider such state tax treatment or benefits, if any, before investing in UESP. • UESP does not provide legal, financial, investment, or tax advice, and the information provided in this document does not contain legal, financial, investment, or tax advice and cannot be construed as such or relied upon for those purposes. You should consult your own tax or legal advisor to determine the effect of federal and state tax laws on your particular situation. • A Morningstar Analyst Rating for a 529 College Savings Plan is not a credit or risk rating. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Please visit Morningstar.com for more information about the Analyst Ratings, as well as other Morningstar ratings and fund rankings. 29
Questio ions & Answers What questions do you have for the presenters? Please share them in the chat box! www.savingsforkids.org
Contact In Information • Monica Copeland , CFED – mcopeland@cfed.org • Nancy Goodin , Hastings City Bank – ngoodin@hcb.us • Dawn Braden , Hastings City Bank – dbraden@hcb.us • Todd Mortensen , UESP – tmortensen@uesp.org www.savingsforkids.org
CSA Resources CSA Design Guide http://bit.ly/InvestingInDreams CSA Directory http://cfed.org/programs/csa CSA Resources (FAQs, Programs, Policy, Research) http://savingsforkids.org/resources www.savingsforkids.org
Join in th the Campaig ign for Every Kid’s Futu ture Join today to help achieve our vision of 1.4 million Children’s Savings Accounts by 2020! www.savingsforkids.org
Upcoming CSA Webinars Wednesday, July 26 (2-3 pm EDT) Developing Program Goals & Interim Metrics for CSA Programs Wednesday, October 25 (2-3 pm EDT) Children’s Savings Account Program Design Spotlight Thank You! www.savingsforkids.org
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