Minnesota Higher Education Office Urges Residents to Invest Tax Refund for a Child's College Education
Contact: Sandy Connolly, (651) 259-3902
Plan Recognized as a Favorite by Kiplinger's Personal Finance Magazine
The Office of Higher Education today urged parents and grandparents to consider using their tax refunds to open a Minnesota College Savings Plan (MCSP) to help save for a college education for their children or grandchildren. Minnesota's state-sponsored 529 college savings plan has just been recognized in the May 2005 issue of Kiplinger's Personal Finance magazine as a favorite for its low expenses, simple investment choices and a "solidly above average performance over the last three years."
"We are pleased with the national recognition the Minnesota plan is receiving, and hope that it will encourage more families to participate," said Susan Heegaard, Director of the Office of Higher Education, which oversees the plan. "Saving for college is always a good idea. Having a small windfall, such as a tax refund, can be a great catalyst for getting started."
According to the IRS, this year's Federal tax refunds have increased an average of $200 for early filers. The average refund grew to $2,436, up 9 percent from last year.
The Minnesota College Savings Plan is a state-sponsored, tax-advantaged 529 college savings plan administered by the national financial services company TIAA-CREF Tuition Financing, Inc (TFI). The plan was introduced in Minnesota on September 20, 2001 and participation has grown significantly each year. As of March 31, 2005, assets totaled $315 million, up 42% since March of 2004. In addition, the total number of accounts in the plan grew to 39,593, up from 32,088 at the end of March 2004.
Popular plan features include:
- Federal and Minnesota state income tax advantages - Contributions to a MCSP account will grow free from federal and Minnesota income taxes
- Tax-Free Withdrawals - Withdrawals used for qualified expenses, including tuition, certain room and board expenses, will be free of both federal* and Minnesota income taxes
- The ability to use funds at colleges throughout the United States
- Low Expenses - An annual asset-based management fee of 0.65% is used to cover the cost of investment management and administrative services
- A $25 minimum investment requirement, an account balance limit of $235,000
- The possibility of a matching grant of up to $300 from the state of Minnesota for eligible low and moderate income families
"As the need for higher education becomes more evident for today's job market, it is crucial that Minnesota families plan ahead and start saving early," said Pierre Dejean of TIAA-CREF Tuition Financing, Inc., Program Director for the Minnesota College Savings Plan.
The Office of Higher Education is a state agency providing students with financial aid programs and information to help them gain access to postsecondary education. In addition to overseeing the state's 529 College Savings Plan, the agency also administers the Minnesota State Grant program, which is a need-based tuition assistance program for Minnesota students. The agency also oversees tuition reciprocity programs, a student loan program, licensing and an early awareness outreach initiative for youth. It serves as the state's clearinghouse for data, research and analysis on postsecondary enrollment, financial aid, finance and higher education trends.
For more information about the Minnesota College Savings Plan, call 1-877-338-4646 or visit www.mnsaves.org.
To view Kiplinger's Personal Finance, visit www.savingforcollege.com/kiplinger/plan_details.php
*The law allowing federal tax-free qualified withdrawals is set to expire on December 31, 2010. Congress may or may not extend the law beyond this date.
The Minnesota College Savings Plan Disclosure Booklet and Participation Agreement should be read carefully before opening an Account. The State of Minnesota, its agencies, the Minnesota State Board of Investment, the Office of Higher Education, TFI, Teachers Insurance and Annuity Association of America (TIAA) 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 Minnesota Board of Investment on behalf of the Office of Higher Education under the Funding Agreement for the Guaranteed Option). Account value will fluctuate based upon a number of factors, including general financial market conditions. Investments are made through Teacher's Personal Investors Services, Inc., as distributor.
If you are not a Minnesota resident or if you have taxable income in another state, you should consider whether that other state offers a 529 plan with a favorable state income tax or other benefits that are not available if you invest in the Minnesota 529 Plan.