The smallest 529 plan weighs consolidation

Apr 16, 2007 @ 8:18 am

By Charles Paikert

NEW YORK — The nation’s smallest Section 529 college savings plan — Tennessee’s BEST Savings Plan in Nashville, which has less than $40 million in assets and is managed by New York-based TIAA-CREF — soon may become the second state to transfer its 529 plan assets to a neighboring state. Tennessee is “aggressively pursuing” joining the $500 million Georgia Higher Education Savings Plan in Atlanta, according to Steve Curry, Nashville-based assistant to state Treasurer Dale Sims. “We don’t have the size to compete efficiently with other plans,” he said. “We think this would be a good alternative to offer citizens a better quality of investment plan, with a wider variety of choices and lower fees.”

Such a combination may represent an alternative between the traditional 529 choices of a massive national plan and a smaller scale statecentric strategy, according to Chuck Penuel, director of the Georgia plan.

“We’re exploring if [we can] create a model that allows other states to join,” he said. The program, Mr. Penuel said, would maintain a low-cost, direct-sold approach and also appeal to families with higher incomes, which may want other options.

Doug Chittenden, TIAA-CREF’s 529 chief, won’t comment on the potential merger until it is finalized.

The two states, Mr. Penuel said, were happy to work with TIAA-CREF.

“[TIAA-CREF] always allowed states to set the policy,” he said. “They don’t see this as the company’s program with the state in the way.”

Mr. Penuel said he expects negotiations with Tennessee to be finalized over the summer.

Last year, Wyoming transferred its 529 plan assets into Colorado’s

Denver-based CollegeInvest 529 college savings program.

— Charles Paikert


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