Merrill Lynch Introduces '529' College-Investing Plan To Help Families Meet Rising Education Costs

NextGen Program Allows Couples to Contribute

More Than $100,000 for Future Education Expenses

Aug 05, 1999, 01:00 ET from Merrill Lynch

    PRINCETON, N.J., Aug. 5 /PRNewswire/ -- Merrill Lynch today became the
 first full-service securities firm to offer a "529" college-investing program
 through the introduction of the NextGen College Investing Plan, providing all
 Americans with a new, tax-advantaged way to help meet the rising costs of
 higher education.
     Also known as qualified state-tuition plans, 529s were made possible by
 recent tax law changes and generally allow individuals to contribute more
 money towards higher-education savings than any other tax-advantaged
 college-investing vehicle.  The NextGen Plan, sponsored by the Finance
 Authority of Maine, is available through Merrill Lynch and can be used for
 expenses at any accredited post-secondary institution in the U.S.
     "The NextGen College Investing Plan can be a tremendous boost to American
 families as they strive to meet growing college costs," said Allen N. Jones,
 Merrill Lynch Senior Vice President and Director, Private Client Marketing.
 "Recent Merrill Lynch research has found that Americans are more concerned
 than ever about their ability to pay for their children's college education,
 yet few are aware of this new tax- advantaged investment vehicle.  By
 providing access to the NextGen plan, Merrill Lynch can help families
 accumulate more funds for education, enabling them to realize the American
 dream of sending their children to college."
     For the past 20 years, college costs have outpaced the general rate of
 inflation and, for many families, the expense  of a college education is the
 single largest financial goal on their horizon.  Current estimates predict
 that when today's newborn child reaches college-enrollment age, the cost of
 attending a public institution could easily exceed $80,000 and more than
 $200,000 at a private university.
     Merrill Lynch's recent college-savings survey, conducted by International
 Communications Research, found that 60% of respondents are very concerned
 about being able to afford the cost of a college education when their children
 are ready to attend.  Yet despite such concerns, only 7% were familiar with
 the benefits of "529" college-investing plans.
     For the first time," added Mr. Jones, "families across the nation will
 have access to one of the best college-investing vehicles available and the
 vast financial-planning resources of Merrill Lynch's 14,000 Financial
     How the Plan Works:
     Working with a Merrill Lynch Financial Consultant, an individual can
 participate in the NextGen College Investing Plan on behalf of a child or
 relative beneficiary.  A NextGen plan is set up and contributions are invested
 based on an asset-allocation strategy that considers the plan beneficiary's
 college-enrollment time-frame.
     Under the NextGen plan, an individual can set up an automated investment
 schedule and contribute as little as $50 a month.  When the beneficiary enters
 college, account balances can be withdrawn and used for college expenses.
     As provided in Section 529, the NextGen plan generally permits individuals
 to contribute up to $50,000 (and couples up to $100,000) per beneficiary in a
 single year without federal gift-tax consequences, provided no additional
 gifts are made to the beneficiary for a five-year period.  Participation in
 the NextGen plan also provides participants with the following benefits and
     -- TAX-ADVANTAGED SAVINGS: Investment earnings grow federal
        income-tax-deferred and are taxed at child's tax rate if withdrawn for
        qualified higher-education expenses;
     -- PROFESSIONAL INVESTMENT MANAGEMENT: All contributions are invested in
        age-tailored portfolios of Merrill Lynch mutual funds and short-term
        money market instruments;
     -- CONTRIBUTION FLEXIBILITY: Low investment minimums ($250 initial
        investment or $50 per month) and high contribution limits provide more
        opportunity for college savings;
     -- WIDESPREAD USAGE: Account balances can be used for tuition and expenses
        at any accredited post-secondary institution in the U.S. (public or
        private, graduate, community colleges, vocational-education schools);
     -- CONTROL: Contributors can change the beneficiary or withdraw the money
        if the child does not attend college;
     -- ESTATE PLANNING: Assets contributed to an account are removed from the
        contributor's estate.
     The Merrill Lynch Private Client Group serves more than four million
 households, small- to-mid-sized businesses and regional financial institutions
 using a planning-based financial-services approach.
     Among the many services available to our clients are brokerage, personal
 credit, insurance, home financing and trust services, as well as retirement
 and group employee benefit services, and business financing.  Merrill Lynch
 clients are served by more than 18,500 Financial Consultants in more than
 900 branch offices worldwide.  As of the end of the second quarter, investors
 had entrusted Merrill Lynch with more than $1.5 trillion in account assets.

SOURCE Merrill Lynch