Regulator pushes for more fee disclosure from 529 college savings plans

MSRB wants to learn more to help consumers become more informed.
JAN 02, 2014
Federal regulators next year will begin collecting additional data from the underwriters of 529 college savings plans, but the information won't immediately be made public. The Municipal Securities Rulemaking Board will collect the first batch of information from the nation's 529 plans by Aug. 30, 2015, and the plan underwriters will have to provide the data twice a year. The information includes the amount of assets in the plan, contributions, withdrawals, fees and performance, according to a regulatory notice released Monday. The Securities and Exchange Commission approved the MSRB's request to collect the data on Friday. The board, formed to protect municipal securities investors, wants to use the data to learn more about the 529 plan market, according to its executive director, Lynnette Kelly. She said the MSRB will evaluate growth of the plans, available investment options and the differences between the plans. The MSRB already makes some information on 529 plans available electronically on its website. It plans to make the additional information public if the MSRB concludes it will help investors make better decisions. Adviser Wayne Zussman of Triton Wealth Management said more information is always welcome for the public. He doesn't think advisers necessarily need additional resources, pointing out that several websites summarize the plans. “The consumer doesn't have all the information at their fingertips, and we see a lot of people coming in with expensive plans and out-of-state plans,” Mr. Zussman said. In some cases, advisers have sold clients a commission-based plan even though the client lives in Maryland and could have received a state tax deduction for savings into the Maryland plan, which is sold directly to the public, he said. The nation's 529 plans, which are named after the section of the tax code that created them and are sponsored by states, are considered municipal securities. Savings in the plans are tax-free as long as the funds are used to pay for college expenses. About $191 billion is currently in 529 plans. Much of the information the MSRB will be collecting already can be found at Savingforcollege.com and CollegeSavings.org, both of which allow users to compare certain features of plans.

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