Rules Governing 529 College Savings Plan Disclosure Proposed

Washington, DC, June 14, 2004 – The Municipal Securities Rulemaking Board (MSRB), the College Savings Plan Network (CSPN), and the National Association of State Treasurers (NAST) recently proposed disclosure requirements intended to provide investors in Section 529 college savings plans with more information about 529 plan performance, risks, objectives, and expenses.

Background
SEC Chairman William Donaldson announced the creation of a new task force, the Chairman's Task Force on College Savings Plans, to examine issues raised by the structure and sale of college savings plans. Chairman Donaldson action was in response to a Congressional request for detailed information on state-sponsored 529 college savings plans by Rep. Michael Oxley (R-OH), Chairman of the House Commission on Financial Services.

The 529 college savings plan market, which is not regulated under federal securities laws, has grown substantially since 1997. CSPN statistics state that there were 4.7 million 529 college savings plan accounts with $39.9 billion in assets by March 31, 2004.

The rules recently proposed by MSRB would impose point-of-sale disclosure obligations on municipal securities dealers that market 529 plans to out of state investors. In June, CSPN and NAST submitted a draft of CSPN’s “Voluntary Disclosure Principles, Statement No. 1,” a set of guidelines adopted by CSPN and NAST intended to provide consumers with the information necessary to make objective comparisons of the fees and expenses associated with investments in qualified tuition programs.

ICI Position
The Institute supports all the recent efforts at improving disclosure in the 529 plan market in order to help investors make informed investment decisions.

Related Links
Additional information about the benefits of saving for education, including an online brochure that helps individuals better understand how state-sponsored 529 plans are helping millions of Americans save for higher education, is available on this website.

Sections of this website also include information about the Institute’s strong support for measures to conform individual states' tax treatment of 529 plan withdrawals to federal tax treatment, legislation that would make permanent the tax-free treatment of qualified withdrawals from Section 529 college savings plans, and proposals that would permit the offer and sale of 529 plan securities through employer payroll deduction programs.