Tax Advantages

Special federal tax benefits can make 529 plans a smart way to save for college.

529 plans are one of the most attractive ways to help a loved one save for college. They offer special tax and gifting benefits and provide great flexibility and control. Also, thanks to the Pension Protection Act of 2006, tax-free distributions from 529 plans are now permanent.

Tax advantages to help your savings work harder.

Whether you are saving for your loved ones or for yourself, you need your money to work hard for you to keep up with the rising costs of education. 529 plans offer unique tax benefits:

Tax-deferred growth. Your earnings grow federal tax-deferred and can be reinvested, helping you build savings over time.
Tax-free distributions.¹ You can take distributions for qualified educational expenses such as tuition, fees, books, on- and off-campus room and board, and even certain expenses for special needs students, free from federal income tax.¹

Note: The above illustration does not depict an investment in John Hancock Freedom 529 and is a hypothetical example of tax-deferred growth and is for comparison purposes only. It is not a guarantee of future results. Rates are subject to change. This illustration does not reflect the effect of asset charges and account fees. These fees would reduce the performance shown in the above illustration. The investment return and principal value of an investment may fluctuate so that distributed investments may be worth more or less than their original value. Tax deferral may work best for long-term goals.

¹ State laws and treatment may vary. Earnings on non-qualified distributions will be subjected to a 10% federal penalty tax. Please speak with your tax adviser for more information.

² The projected values assume an initial lump sum of $10,000 is invested and $150 is invested each month thereafter for 18 years at a hypothetical compound annual growth rate of 7%, accrued monthly. At a 28% tax bracket, after 18 years, the investment would grow to $77,172 in a taxable account compared with $99,584 in a tax-deferred account. No consideration is given for state or local taxes.

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If your state or your designated Beneficiary’s state offers a 529 plan you may want to consider what, if any, potential state income tax or other benefits it offers, before investing. State tax or other benefits should be one of many factors to be considered prior to making an investment decision. Please consult with your financial, tax or other advisor about how these state benefits, if any, may apply to your specific circumstances. You may also contact your state 529 plan or any other 529 college savings plan to learn more about their features. Please contact your financial consultant or call 1-866-222-7498 to obtain a Plan Disclosure Document or prospectus for any of the underlying funds. The Plan Disclosure Document contains complete details on investment objectives, risks, fees, charges and expenses, as well as more information about municipal fund securities and the underlying investment companies that should be considered before investing. Please read the Plan Disclosure Document carefully prior to investing.

John Hancock Freedom 529 is a college savings plan offered by the Education Trust of Alaska, managed by T. Rowe Price, and distributed by John Hancock Distributors LLC through other broker/dealers that have a selling agreement with John Hancock Distributors LLC. John Hancock Distributors LLC is a member of FINRA, and is listed with the Municipal Securities Rulemaking Board (MSRB). © 2008. John Hancock. All rights reserved.

529 plans are not FDIC insured, may lose value and are not bank or state guaranteed.

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