Kentucky Education Savings Plan Trust

Fees and Expenses

The following table describes the fees and expenses that you pay if you open and contribute to any of the investment options in the Plan. These fees are indirectly paid out of the assets of your Account. Except for the fees listed below, there are currently no other fees, charges or penalties imposed by or payable to KESPT in connection with opening or maintaining an Account. The Commonwealth reserves the right to change the current fees, or to impose new or additional fees, expenses, charges or penalties in the future.


Fee Table


ANNUAL ASSET-BASED FEES

Investment Option Program Manager Fee(1)(2) Estimated Underlying Mutual Fund Expenses(3) State Fee Total Annual Asset-Based Fees(4)
Managed Allocation
Age Band 1 (0-3 Years)
 0.43% 0.27% None 0.70%
Age Band 2 (4-7 Years)
 0.41% 0.29% None 0.70%
Age Band 3 (8-11 Years)
 0.41% 0.29% None 0.70%
Age Band 4 (12-14 Years)
 0.40% 0.30% None 0.70%
Age Band 5 (15-17 Years)
 0.42% 0.28% None 0.70%
Age Band 6 (18 and Over)
 0.47% 0.23% None 0.70%
 
Active Equity Option
 
 0.50% 0.41% None 0.91%
 
Equity Index Option
 0.50% 0.11% None 0.61%
 
Fixed Income Option
 
 0.33% 0.47% None 0.80%
 
Guaranteed Option (5)
 
 0.00% 0.00% None 0.00%
 

 

(1) The Program Manager Fee is the only fee deducted from Program assets. This fee may change at any time. Although there are no fees that are deducted from your Account, when you invest in the Program, you bear a pro rata portion of the Program expenses because when fees are deducted from Program assets, the value of the Trust Units is reduced.
(2) For its services as Program Manager, each Investment Option (with the exception of the Guaranteed Option) pays TFI a Program Manager Fee equal to the stated percentage of the average daily net assets held by that Investment Option. However, for the Managed Allocation Option and the Fixed Income Option, the percentages listed in this column may fluctuate. For those Investment Options, generally, if the underlying Mutual Fund expenses increase, then the Program Manager Fee decreases.

(3)

 For each Investment Option (with the exception of the Guaranteed Option), the figures in this column are based on a weighted average of the expenses of each underlying Mutual Fund's expense ratio as of February 1, 2008, in accordance with the Investment Option's asset allocation among its underlying Mutual Funds. Each Investment Option (other than the Guaranteed Option) bears its pro rata portion of the underlying Mutual Funds' expenses because when fees are deducted from an underlying Mutual Fund's assets, the value of the underlying Mutual Fund's shares is reduced.

(4)

 The total annual asset-based fees ("Total Fees") equal the Estimated Underlying Mutual Fund Expenses plus the Program Manager Fee. The portion of Total Fees attributable to the Program Manager Fee is assessed over the course of the year against assets in each Investment Option (with the exception of the Guaranteed Option). The portion of Total Fees attributable to Estimated Underlying Mutual Fund Expenses is borne by each Investment Option as discussed in footnote (3). You should refer to the Investment Cost Example below for the total assumed investment cost over 1-, 3-, 5-, and 10-year periods.
(5) The Guaranteed Option does not pay a Program Manager Fee. TFI does, however, receive from TIAA-CREF Life, the issuer of the Funding Agreement, an annual asset-based fee to pay TFI for distribution, administration and other services that TFI provides for this Investment Option. TIAA-CREF Life may discontinue this fee at any time.


Investment Cost Example

The example in the following table is intended to help you compare the cost of investing in the different Investment Options over various periods of time. This hypothetical example assumes that:

  • You invest $10,000 in an Account for the time periods shown below.
  • Your investment has a 5 percent compounded return each year, except for the Guaranteed Option, which is assumed to have a 3% compounded return each year.
  • You withdraw the assets from your Account at the end of the specified periods for Qualified Higher Education Expenses.
  • Total annual asset-based fees remain the same as shown in the Fee Table above.
  • The example does not consider the impact of any potential state or federal taxes on the redemption.

Although your actual costs may be higher or lower, based on the above assumptions your costs would be:

INVESTMENT OPTIONS APPROXIMATE COST OF
$10,000 INVESTMENT
     1  Year    3 Years    5 Years    10 Years
Managed Allocation Option
Age Band 1
(0-3 Years)
 $72 $225 $391 $873
Age Band 2
(4-7 Years)
 $72 $225 $391 $873
Age Band 3
(8-11 Years)
 $72 $225 $391 $873
Age Band 4
(12-14 Years)
 $72 $225 $391 $873
Age Band 5
(15-17 Years)
 $72 $225 $391 $873
Age Band 6
(18 and Over)
 $72 $225 $391 $873
 
Active Equity Option
 
 $93 $291 $506 $1123
 
Equity Index Option
 (effective as of 11/3/08)
 $63 $196 $341 $764
 
Fixed Income Option
 
 $82 $256 $446 $993
 
Guaranteed Option
 
 $0 $0 $0 $0


Additional Fees
The table below indicates that there are no additional fees and expenses deducted from each Account/paid directly by the Participant.


   Percent   Dollars 
Application Fee
  0% $0
 
Cancellation Fee
  0% $0
 
Change in Beneficiary
  0% $0
 
Change in Investment Options
  0% $0
 
Other Charges as applicable
  0% $0
 

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The tax information contained on the Kentucky Education Savings Plan Trust (the Plan) Web site is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and services addressed in the Web site. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.

The Plan is administered by the Kentucky Higher Education Assistance Authority. TIAA-CREF Tuition Financing, Inc. (TFI) serves as Program Manager. TFI's affiliate, TIAA-CREF Individual & Institutional Services, LLC, is the distributor.

The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating information you consider important in making an investment choice, the ultimate decision is up to you. It is a good idea to revisit your investment strategy periodically as your goals, personal financial situation, and market conditions change.

Consider the investment objectives, risks, charges and expenses before investing in the Plan. Please call toll-free 1-877-KY TRUST (1-877-598-7878) for a Disclosure Booklet containing this information. Read it carefully.

Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan.

The Commonwealth of Kentucky, its agencies, TIAA-CREF Tuition Financing, Inc., Teachers Insurance and Annuity Association of America and its affiliates do not insure any account or guarantee its principal or investment return except for TIAA-CREF Life Insurance Company’s guarantee to the Kentucky Education Savings Plan under the funding agreement for the Guaranteed Option. Account value will fluctuate based upon a number of factors, including general market conditions.

The Plan Web site is for informational purposes only, and does not constitute an offer to sell or solicitation of an offer to buy any security that may be referenced on the site. Such offer or solicitation can be made only through the Disclosure Booklet.

The Plan Web site contains links to other Web sites. Neither the Plan Trust nor TFI and its affiliates are responsible for the content of those other Web sites. The accuracy of information on those sites cannot be confirmed.

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© 2008 TIAA-CREF Tuition Financing Inc.