State College Savings Plans (529 Plan)

The cost of going to college has been increasing at a faster rate than the consumer price index and median family income. In fact, during the past 10 years, inflation of college tuition averaged 6% compared to the general price of inflation of 3%. It is further projected that within the next 10 years, the cost of going to college for four years, which includes tuition, room, and board, could amount to a total of $60,000 to $100,000.

One way to save for college costs is investing in a state college savings plan, known as a 529 plan. The benefit of such plans is the tax-deferred or tax-free growth of investments. The federal tax laws do not have age or time restrictions of use of the funds, but the account is owned by the adult who opens it, not the future student. All states have or are developing a 529 savings plan, and all have a penalty of 10% of growth or earnings for funds that are not used for educational purposes. The plans differ in terms of managing company, fees, number of investment options, and minimum investment. There are no residency requirements to open a 529 plan account in any of the states except Kentucky, Louisiana, New Jersey, North Carolina, Oregon, and Vermont.

The following table provides comparative information on the 529 plan for each state.

State Company Fees Minimum Contribution State Tax Breaks
Alabama Under development Under development Under development Under development
Alaska T. Rowe Price Maintenance: $30
Management: 0.3%
Fund expenses: 0.32 – 0.71% 		$250 n/a
Manulife Financial Maintenance: $30
Management: 0.75- 1.05%
Fund expenses: 0.45 – 1.38% 		$250 n/a
Arizona College Savings Bank none $250 Tax free growth
Waddell and Reed Enrollment: $10
Management: .91 –1.66%
Fund expenses: 0.79 - 0.92% 		$500 Tax free growth
Securities Management Enrollment: $10
Fund expenses: 0.49- 2.10% 		$20 - $500 Tax free growth
Arkansas Mercury Advisors Maintenance: $25
Management: 0.69 – 0.95%
Fund expenses: 0.70 – 1.38% 		$250 Tax free growth
California TIAA-CREF Management: 0.70 – 0.80% $25 Tax deferred growth
Colorado Salomon Smith Barney Maintenance: $30
Management: 0.99 – 1.09%
Fund expenses: 0.38 – 0.97% 		$25 Entire contribution is deductible;
Tax free growth
Connecticut TIAA-CREF Management: 0.57 – 0.59%
Fund expenses: 0.16 – 0.22% 		$25 Tax free growth
Delaware Fidelity Investments Maintenance: $30
Management: 0.30%
Fund expenses: 0.65 – 0.81% 		$500 n/a
Florida TIAA-CREF Under development Under development no state income tax exempt from intangible tax
Georgia TIAA-CREF Under development Under development under development
Hawaii Not yet chosen Under development Under development Under development
Idaho TIAA-CREF Management: 0.70%
Fund expenses: 0.16 –0.23% 		$25 Up to$4000 deduction/year;
Tax free growth
Illinois Salomon Smith Barney Enrollment: $30
Management: 0.99% 		$25 Tax free growth
Indiana One Group Investments Maintenance: $20 - $30
Management: 0.40 – 0.95%
Fund expenses: 0.35 – 0.97% 		$50 Tax free growth legislation pending
Iowa Vanguard Management: 0.65% $25 $2112 deduction per beneficiary;
tax free growth
Kansas American Century Enrollment: $40
Management: 0.39%
Fund expenses: 0.52 – 0.95% 		$500 - $2500 $2000 deduction per beneficiary
Kentucky TIAA-CREF Management: 0.80% $25 Tax free growth
Louisiana State Treasurer None $10 Tax free growth;
deduct up to $2400/yr of contributions per beneficiary
Maine Merrill Lynch Maintenance: $50
Management: 0.55 – 0.90%
Fund expenses: 0.76 –1.79% 		$250 Tax free growth
Maryland T.Rowe Price Enrollment: $90
Maintenance: $30
Management: 0.38%
Fund expenses: 0.35 – 0.99% 		$250 Deduct up to $2500 of contribution per yr per account
Massachusetts Fidelity Investments Maintenance: $30
Management: 0.30%
Fund expenses: 0.64 – 0.81% 		$1000 n/a
Michigan TIAA-CREF Management: 0.65% $25 $5000 deduction; Tax free growth
Minnesota TIAA-CREF Maintenance: 0.65% $25 Annual match of up to $300
Mississippi TIAA-CREF Management: 0.70%
Fund expenses: 0.16 – 0.23% 		$25 $10000 deduction; Tax free growth
Missouri TIAA-CREF Management: 0.65% $25 $8000 deduction;
Tax free growth
Montana College Savings Bank none $250
Nebraska Union Bank and Trust Maintenance: $24
Management: 0.6%
Fund expenses: 0.32 – 0.44%		 None set $1000 deduction per family;
Tax free growth
AIM Maintenance: $25
Management: 0.35 – 0.99%
Fund expenses:1.06 – 1.67% 		$500 $1000 deduction per family;
Tax free growth
Nevada Strong Capital and American Skandia Maintenance: $30
Management: 0.15 – 0.60%
Fund expenses: 0.94 – 2.20% 		$250
Strong Capital Enrollment: $25
Maintenance: $25
Management: 1.30% 		$250
New Hampshire Fidelity Investments Maintenance: $30
Management: 0.30 – 0.75%
Fund expenses: 0.48 – 1.24% 		$1000 n/a
New Jersey State Treasurer Maintenance: $5
Management: 0.50% 		$300 Tax free growth;
scholarship of $500 -$1500 for attending in-state college
New Mexico Schoolhouse Capital Enrollment: up to 3.5% sales charge
Maintenance: $30
Management: 0.30%
Fund expenses: 0.41 – 1.24% 		$250 All contributions are deductible;
Tax free growth
Oppenheimer Funds Enrollment: 3.5% sales load
Maintenance: $25
Management: 0.35 – 0.95% 		$250 All contributions are deductible;
Tax free growth
New York Life Investment Maintenance: $25
Management: 0.35% 		$250 All contributions are deductible;
Tax free growth
New York TIAA-CREF Management: 0.65% $25 $5000 deduction;
Tax free growth
North Carolina State College Foundation Management: 0.25%
Fund expenses: 0.58 – 1.16% 		$5 Tax free growth
Seligman Maintenance: $25
Management: 0.25%
Fund expenses: 0.58 – 1.16% 		$250 Tax free growth
North Dakota Morgan Stanley Dean Witter Maintenance: $30
Fund expenses: 0.68 – 1.22% 		$25
Ohio Putnam Maintenance: $25
Management: 0 – 5.75%
Fund expenses: 0.49 –1.23% 		$25 $2000 deduction/beneficiary w/unlimited carryover;
Tax free growth
Oklahoma TIAA-CREF Management: 0.60%
Fund expenses: 0.18 – 0.24% 		$25 n/a
Oregon Strong Capital Management Maintenance: $20
Management: 0.95 –1.27% 		$250 $2000 deduction per tax filing
Pennsylvania Legislation pending Under Development Under development Under development
Rhode Island Alliance Capital Management Maintenance: $25
Management: up to 1.10%
Fund expenses: 0.68 – 1.67% 		$1000 Under consideration
South Carolina Banc of America Enrollment: $25
Maintenance: $25
Management: 0.20%
Fund expenses: 0.20 – 1.23%		 $250
South Dakota Legislation pending Under development Under development Under development
Tennessee TIAA-CREF Management: 0.95% $25 Tax free growth
Texas Legislation pending Under development Under development
Utah State agency Fund expenses: 0 – 0.05% $25 $1365 deduction;
Tax free growth
Vermont TIAA-CREF Management: 0.80% $25 Tax free growth
Virginia American Funds Enrollment: $20
Maintenance: $10		 $250 Tax free growth
Washington Legislation pending Under development Under development Under development
West Virginia Hartford Life Maintenance: $25
Management: 1.16 – 2.15% 		Varies
Wisconsin Strong Capital Management Enrollment:$20
Maintenance: $10
Management: 1.25% 		$250 $3000 deduction per dependent per tax filing;
Tax free growth
Wyoming Mercury Advisors Maintenance: $25
Management: 0.95%
Fund expenses: 0.85 – 1.45%		 $250 - $1000 n/a


My Accounts Adviser Area Home
Copyright? 2001 - Adviser Financial Group, Inc. - All Rights Reserved