2016 News

With decreased costs, families get more from MOST 529 college savings plan

​Families’ costs have decreased for Missouri’s MOST 529 college savings plan, and now there is no minimum deposit required to open an account. 

Under a new agreement with Ascensus College Savings, annual expenses for the MOST 529 Direct Plan age-based funds—the most popular investment—are 0.23 percent, or $2.30 for every $1,000 invested. Savings for those who use the plan are estimated at $9 million over five years, Missouri Treasurer Clint Zweifel announced recently.

“MOST investors will see immediate savings,” Zweifel said. The MOST 529 Direct Plan is one of the 10 lowest-cost plans in the nation for age-based investors, according Morningstar.

In addition, families now may open an account with any amount and not the previous minimum of $25. Some state 529 plans require more money to open an account than others.

“We are pleased that Missouri joins six other states with 529 plans that do not require a minimum deposit, which is especially helpful for low-income families who want to save for their children’s postsecondary education,” said Margaret Clancy, policy director at the Center for Social Development. Clancy also is the project director for the center’s SEED for Oklahoma Kids experiment, a large-scale, multistudy​ policy test of automatic and progressive 529s.

Zweifel, who after serving two terms will depart as Missouri treasurer next year, has said his focus for MOST has been on increasing families’ access to the program and keeping costs low.

The MOST 529 is a tax-preferred plan designed to help families save for higher education, be it college, trade or technical school. 529s are named after a section of the Internal Revenue Code and are usually sponsored by a state.

Account owners may receive a deduction for contributions of up to $8,000 per year per taxpayer ($16,000 for married filing jointly) from their Missouri income taxes. Contributions can grow free from federal and state income tax. Later, withdrawals for qualified higher education expenses will also be exempt from federal and Missouri income taxes.

“Several Missouri nonprofits use the MOST plan to provide deposits for postsecondary education for families of young children,” Clancy said. “And some states use their 529 plan to automatically set aside funds for newborns or kindergarten children.”

Trends toward lower fees and greater incentives for all children in the state make 529s an attractive platform for inclusive children’s savings​.​