Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Presentation (May 2024)
20 slides from Principal Financial's investor presentation, May 2024
Slide 1: Introduction to 529 Plans
INTRODUCTION TO 529 PLANS Introduction to 529 Plans
Slide 2: Contents
CONTENTS What is a 529 plan 03 Features of a 529 plan 05 Changing education expenses 07 Education savings options 10 Student loans and financial aid 14 Questions 20 Introduction to 529 Plans 2
Slide 3: What is a 529 plan
WHAT IS A 529 PLAN A 529 plan is a tax-advantaged investment vehicle within the United States designed to save for future higher education expenses for a specified beneficiary. Introduction to 529 Plans 3
Slide 4: Challenges for education savers
CHALLENGES FOR EDUCATION SAVERS INVESTMENTS RISK VERSUS RETURN • Need to outperform college inflation • Need an investment return that • Can be a limited time horizon equals or exceeds increases in the depending upon withdrawal timeline Higher Education Price Index (HEPI) • Cost set by educational i
Slide 5: A truly flexible savings vehicle
A TRULY FLEXIBLE SAVINGS VEHICLE Features of a 529 plan Tax benefits Gifting and Withdrawals Availability Earnings grow tax- estate planning Proceeds can be used Anyone can open, deferred and qualified Contribute up to $18,000 at eligible institutions regardless of income withdrawals are tax-free pe
Slide 6: The benefits of education
THE BENEFITS OF EDUCATION Studies show the higher the level of education achieved, the higher the median salary earned and lower the unemployment rate. Education correlated with lower unemployment, higher salary Median salary 15.0% $108,316 $108,160 Unemployment rate 12.5% $86,372 $74,464 Unemployme
Slide 7: A rising bar: education costs continue to increase
A RISING BAR: EDUCATION COSTS CONTINUE TO INCREASE Average annual undergraduate college cost* (past 10 years): public vs. private All Institutions Public Private $60,000 $50,000 $47,306 $40,000 $30,000 $26,903 $20,000 $19,920 $10,000 $0 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/
Slide 8: A larger share of your wallet
A LARGER SHARE OF YOUR WALLET Education costs are rising faster than inflation Higher Education Price Index (HEPI) vs. U.S. inflation 6.0% Over time, college costs have 5.2% 5.0% outpaced inflation 4.7% 4.0% 4.0% 3.7% 3.5% 3.0% 3.0% 3.0% 3.0% 2.7% 2.6% 2.4% 2.1% 2.0% 2.1% 1.9% 2.0% 1.7% 1.8% 1.6% 1.
Slide 9: Tax benefits
TAX BENEFITS NEW MEXICO Home of Scholar’s Edge TAX PARITY These states offer tax deductions for contributions to any 529 plan regardless of state. TAX NEUTRAL These states do not offer tax deductions for 529 contributions or have no state income tax. IN-STATE TAX BENEFIT These states offer tax deduc
Slide 10: Comparing education savings plans
COMPARING EDUCATION SAVINGS PLANS COVERDELL EDUCATION SAVINGS TAXABLE RULES 529 PLANS ACCOUNT (CESA) UGMA/UTMA SAVINGS ACCOUNT Federal income tax Contributions made with Contributions made with Earnings and capital gains are Earnings taxable at account owner’s after-tax dollars. Earnings after-tax d
Slide 11: Comparing education savings plans (continued)
COMPARING EDUCATION SAVINGS PLANS (CONTINUED) COVERDELL EDUCATION SAVINGS RULES AS IT RELATES TO 529 PLANS ACCOUNT (CESA) UGMA/UTMA TAXABLE SAVINGS ACCOUNT Qualified expenses Tuition, fees, books, computers and Tuition, fees, books, equipment, No restrictions No limit related equipment, supplies, su
Slide 12: How people are saving
HOW PEOPLE ARE SAVING Over half of families are saving for college, but with variety of savings vehicles Over half of families have Proportion of college funds held in a plan to pay for college1 each account type2 53% in 2023 Other, 9% Checking account, 8% Prepaid state plan, 8% 59% in 2022 58% in 2
Slide 13: Compounding savings over time
COMPOUNDING SAVINGS OVER TIME Taxable savings account vs. 529 savings Example: Two families who invested differently, Family A and Family B. Both families opened their savings accounts and opted for monthly contributions of $150. Both families earned a 7.00% annual average rate of return on their in
Slide 14: Student loan debt over the past decade
STUDENT LOAN DEBT OVER THE PAST DECADE Student loan debt remains high Higher Education Price Index (HEPI) vs. U.S. inflation $1.80 $1.57 $1.60 $1.60 $1.51 $1.41 $1.39 $1.33 $1.40 $1.28 $1.17 $1.20 $1.13 $1.06 In trillions $1.00 $0.94 $0.80 $0.60 $0.40 $0.20 $0.00 2013 2014 2015 2016 2017 2018 2019 2
Slide 15: Student loans
STUDENT LOANS A college education costs, on average, just under $104,000 for a four-year, in state school for tuition and fees, room and board, books and supplies, as well as transportation. 50% through a 529 and 100% through a 529 plan 50% through student loans 100% student loans A family invested
Slide 16: Financial aid: the Student Aid Index (SAI)
FINANCIAL AID Financial aid is needs based and is determined by: The Student Aid Index (SAI) WHAT IS NO LONGER INCLUDED WHAT IS IT: FAMILIES AND SIBLINGS: IN THE CALCULATIONS? • SAI is the new measure of a • The new FAFSA form looks at each • Beginning with the 2024-25 student’s ability to pay for s
Slide 17: Saving now means borrowing less later
SAVING NOW MEANS BORROWING LESS LATER Savings-focused strategy Loan-focused strategy Loans Financial aid Sophie’s family: Savings-focused 20% education funding strategy. 25% 40% Financial aid Assume Sophie’s education costs 75% are $100,000 and her family Loans saved a portion of that in a 529 colle
Slide 18: Saving now means borrowing less later
SAVING NOW MEANS BORROWING LESS LATER Beyond education savings, 529 plans can help families leave a legacy When considering whether to use a 529 plan in your estate plan, keep in mind the following key points TAX-FREE CONTRIBUTIONS ACCELERATED GIFTING TAX PLANNING WITHDRAWALS CONTROL An individual m
Slide 19: Questions?
QUESTIONS? FOR ADDITIONAL RESOURCES, VISIT: SCHOLARSEDGE529.COM Introduction to 529 Plans 19
Slide 20: Disclosures
DISCLOSURES Scholar's Edge® (“Scholar’s Edge” or the “Plan”) is operated as a qualified tuition program offered and sponsored by The Education Trust Board of New Mexico (the “Board”) and is available to all U.S. residents. Ascensus College Savings Recordkeeping Services, LLC is the Program Manager f
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