Document text
49 °F Forecast | Road Cams Saturday, October 9, 2004 Today's News | Classifieds | Autos | Homes | Jobs | Tempo | Health | Community | Home Delivery SECTIONS Home Page Local News Sports Business Obituaries Life Opinion - Politics Tempo AP News Weather Classified Archives Site Map SPECIAL SECTIONS Since We Asked Outdoor Journal Menu Guide How To Guide Wellness Connection Readers' Choice Real Estate Showcase Joy Magazine Homelife Magazine Wedding Guide Rogue Valley's Finest EXTRA Newspaper in Education Personals Movie Times TV Times E The People MARKETPLACE Find a Car Find a Home Find a Job Classifieds Place an ad eSouthernOregon Automotive Communities Entertainment Publications Recreation Calendar CUSTOMER SERVICE Frequent Questions Advertising Information Home Delivery Employment Contact Us Media Kit Network Affiliate Oregon Road Conditions & Cams Email Story to a Friend September 23, 2004 Treasurer touts education savings plan for kids By ANITA BURKE Mail Tribune The sixth-graders at Washington Elementary School have big plans for life after high school — careers as a pediatric dentist, a lawyer, a teacher, a chemist and a paleontologist. The kids shared their goals with state Treasurer Randall Edwards Wednesday as he shared information about the Oregon College Savings Plan — a way to help pay for the education to make those dreams come true. The plan is one of three state-administered programs that encourage families to save for college by offering tax benefits. Known generally as 529 plans for the section of the federal tax code governing them, the plans offer state income-tax deductions for contributions of up to $2,000 a year, tax-free growth and no state or federal taxes on withdrawals for educational expenses. The money can be used for tuition, fees, books, supplies, and room and board at universities, community colleges or vocational schools nationwide. Two of Oregon’s 529 plans are available only through financial advisers. The Oregon College Savings Plan, the state’s most popular plan, is available for do-it-yourself investors. "This is a powerful savings tool," Edwards said. Advertisement When Oregon introduced its 529 plans in 2001, Edwards started the first accounts in the state for his three kids. Investors have opened nearly 30,000 Oregon College Savings Plan accounts, worth a total of $160 million. OppenheimerFunds Inc. took over the management of the assets Aug. 30 after the state fired its previous fund manager, Strong Capital Management. The company was investigated for questionable trading practices. Edwards said Oregon investors didn’t appear to have been harmed by Strong’s practices, but the state wanted to separate itself from potential problems. "By the state having a role, we keep the investor in mind," he said. Investors still face risks inherent in stock and bond markets. With the switch to Oppenheimer, investors have additional funds to choose from and lower fees. Management fees range from 1.04 percent to 0.33 percent, depending on the mutual fund selected, and there is no start-up or annual maintenance fee, officials said. "We can use the leverage we have in the market, the power of the treasury, to reduce fees," Edwards said. Financial professionals in the Rogue Valley like 529 plans, but note that options for college savings abound. "I steer clients toward 529s when appropriate," said Michael Buckner, a financial adviser with Waddell & Reed in Medford. However, he said he hasn’t recommended the Oregon College Savings Plan, because of uncertainties linked with its management changes. Waddell & Reed offers an Arizona-based plan that doesn’t provide Oregon state tax benefits. However, investors can buy into plans anywhere, and performance, fees and service can be more important than modest state tax savings, he said. Oregon’s plans are ranked favorably at www.savingforcollege.com , an independent Web site that has general information on savings plans, including 529s from all states. Sheryl Morace-Mikel, owner of Diversified Investments in Medford and Grants Pass, said most of her clients interested in 529s are parents or grandparents in high tax brackets looking to reduce their state tax bill. Generous grandparents can put up to $55,000 into a 529 in an estate-reducing move that avoids gift taxes, she said. People in lower tax brackets might benefit from starting a Roth IRA, to which they can contribute $3,000 or $3,500 annually depending on their age, she said. As long as the account has been open for at least five years, funds can be withdrawn tax-free for educational expenses, she said. Buckner likes to start investors with a Coverdell Educational Savings Account. Such accounts have contribution limits and students must deplete them by age 30, but fees are generally low, he said. They can also be used, tax-free, for any school expense, even for grade school or high school. Doug Armstrong, a registered principalat LPL Financial Services of Medford, likes 529s, particularly Oregon’s plans, for the state tax benefits and the control parents retain over the money. The oldest means parents and grandparents had for funding college, set out in the Uniform Gifts to Minor Act, didn’t offer tax-free distributions and the child took control of the account at age 18. "Hence they could say thanks folks but I choose a Harley or Hawaii instead of Harvard," Armstrong said. With a 529, the original investor retains control and if the intended student opts out of school, the funds can be redirected to other family members, he said. To learn more For information about the Oregon College Savings Plan, visit the Web site www.oregoncollegesavings.com or call toll-free 1-86-OR-SAVING (1-866-772-8464). Reach reporter Anita Burke at 776-4485, or e-mail [email protected] . Mail Tribune Home Local News | Sports | Business | Obituaries | Life Opinion - Politics | AP News | Archives | Site Map E Southern Oregon | Classified Copyright © 1997-2004 Mail Tribune. All rights reserved. Privacy Policy | Terms & Conditions Website Feedback ADVERTISERS A D V E R T I S E R S SPECIAL SECTIONS Auto Finder Job Finder Home Finder Joy Magazine Homelife Magazine Tempo Readers' Choice Real Estate Showcase Since We Asked Outdoor Journal Moving to Southern Oregon? Volunteer Opportunities