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
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 Consultants." 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 features: -- 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
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