JEFFERSON CITY — Parents, grandparents, aunts and uncles everywhere search each holiday season for the perfect gift for daughters, sons, grandchildren, nieces and nephews. While toys and games may be what our children have on their wish-list right now, starting a college savings plan is one of the most important gifts you can give a child in your life — they will thank you for it later. Missouri's college savings plan is MOST 529, and it is what my wife, Janice, and I use to save for our daughters' future. It was easy to sign up at mostcollegesaver.com.
We have started saving with MOST — Missouri's 529 College Savings Plan because in the end it is less expensive to save now than it is to borrow later. While you and I may not be able to save enough to cover the entire bill, every dollar we save now is one less dollar we and our children will have to borrow and pay back with interest later. A commitment of even a small amount each month can make a huge difference when it is time for our children to go to college. This commitment also comes with generous tax advantages and flexible spending options.
Investment returns are not guaranteed, and you could lose money by investing in the Plan.
* Earnings on nonqualified withdrawals may be subject to federal income tax and a 10 percent federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
** Contributions to the plan in a tax year are deductible from Missouri state income tax but may be subject to recapture in subsequent years if you make a nonqualified withdrawal.
If you are not a Missouri taxpayer, consider before investing whether your or the designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
The Missouri Higher Education Savings Program (the "Program Trust") is a trust created by the State of Missouri. When you invest in MOST—Missouri's 529 College Savings Plan, you are purchasing portfolio units issued by the Program Trust. Portfolio units are municipal securities. The plan has been implemented and is administered by the Missouri Higher Education Savings Program Board. Upromise Investments Inc. and Upromise Investment Advisors LLC serve as the program manager and recordkeeping and servicing agent, respectively, with overall responsibility for the day-to-day operations, including effecting transactions. The Vanguard Group Inc. and American Century Investments serve as investment managers for the plan. Vanguard Marketing Corp., an affiliate of The Vanguard Group Inc., markets and distributes the plan. The plan's portfolios, although they invest in mutual funds, are not mutual funds.
Missourians who are account owners receive tax advantages for contributing to their MOST 529 account. First, our contributions and earnings grow tax deferred and can be withdrawn tax-free* when used for qualified higher-education expenses, including tuition, certain room-and-board expenses and books. Second, we qualify for a 2010 state income tax deduction on contributions made by Dec. 31.**
Additionally, savings in a MOST 529 account can be used for eligible four-year colleges, two-year colleges and technical colleges anywhere in the United States. This is the flexibility we need for our children so they can make the choices that help them achieve their dreams.
Starting a MOST 529 account is easy, and this is the perfect time of year to do it so you can get your tax deduction. You can open an account with as little as $25 and contribute $25 or more on a regular basis or at your convenience. In fact, if you invest $50 a month from the time your child is born until he or she is age 18, you could have almost $17,000 saved for your child's future. This is based on a 5 percent annual return and is not guaranteed, but it is an example of how even a small investment can really add up over time. This hypothetical example does not represent the return on any particular investment. The final account balance does not reflect any taxes or penalties that may be due upon distribution.
MOST 529 has low costs and no account fees, and Missourians can chose from a wide range of investment options. We can even sign up to use Ugift, a service that lets us invite family and friends to celebrate the holiday season with the gift of college savings by sending a contribution directly to an account.
This year, give a child in your life the gift of a higher education by going to mostcollegesaver.com today.
Clint Zweifel is Missouri's state treasurer.