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PRESS RELEASEOffice of Missouri State
Treasurer |
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PRESS RELEASEOffice of Missouri State
Treasurer |
JEFFERSON CITY – Missouri Treasurer Sarah Steelman and the Missouri Higher Education Savings Board this week issued a request for proposal for management of the Missouri Savings for Tuition Program, (MOST), the state’s tax-advantaged 529 college savings plan.
The program, in which the state serves as trustee of approximately $750 million owned by 80,000 different account holders, has not been rebid since the program was established in 1999. Steelman serves as chairman of the Higher Education Savings Board that oversees the program.
“Our goal is to make Missouri’s 529 plan the best in the nation,” Steelman said. “This RFP is an essential step in meeting that goal and in helping every family take full advantage of tax breaks and expanded investment opportunities to help pay for their children’s higher education costs.”
Under the Missouri 529 plan, annual contributions of up to $8,000 for individual taxpayers and $16,000 for married couples filing jointly are deductible from income on which state income taxes are paid. Earnings on those investments are exempt from state and federal taxes as long as the funds are ultimately used to pay for eligible college expenses. The federal exemption on earnings is scheduled to expire in 2010, but may be extended by Congress.
“Our priorities in the RFP are to sustain the program’s low-cost direct investments while at the same time giving families who want a managed plan a wider range of investment options,” Steelman said. “Above all, we want to ensure the safety of investments and to make certain that families get what they pay for in selecting a college savings plan.”
The RFP contains provisions for low-cost direct investments, which typically involve investments into index funds, as well as advisor-assisted options to allow investments in actively managed funds or other investment vehicles. It encourages proposals to include multiple fund families to increase consumer choices among funds, and an open architecture to include new mutual fund families or other investment options at a later date.
“This type of investment has changed dramatically since first established,” Steelman said. “We want to include the flexibility and features to give Missouri citizens the best possible 529 savings advantages.”
Prospective program managers will have until Oct. 31 to file bids to manage the funds. The Treasurer and the Higher Education Savings Board will make final selection by Dec. 31. The contract will be in effect for five years.
The RFP will replace the original management contract, which was approved in 1999. That contract was originally set to expire in 2004. It was twice extended by previous boards without bid, and is currently set to expire on May 9, 2006.
By completing the bid process at the end of December, transition – if any -- between program managers could be completed without inconvenience to account holders before the current program expires in May.
“We have been in contact with most prospective fund managers in the nation, and are excited by the possibilities that this proposal holds to help all Missouri families save for higher education costs,” Steelman said. “This is a real opportunity to make an excellent program even better for the people of our state.”