Study ranks Michigan Education Savings Program among lowest-cost 529 investment options

LANSING – A new study by Savingforcollege.com cites the Michigan Education Savings Program (MESP) as having among the lowest expenses of all 55 direct-sold 529 plans in the nation.

According to the website’s 529 Fee Study, MESP was among only six widely available state-sponsored 529 plans with at least one stock- or bond-based option with 10-year costs totaling under $300 on a $10,000 initial investment.

Costs include all account maintenance and investment management fees, including the expense ratios of the underlying investments in the plans’ investment portfolios, Savingforcollege.com said.

“We understand that fees and expenses can have a significant impact on a college-savings fund,” said Michael Noone, president of TIAA-CREF Tuition Financing, Inc., which manages MESP on behalf of the state of Michigan. “The less families have to spend on investment expenses, the more their hard-earned money goes toward building a college savings fund.”

Savingforcollege.com also ranks MESP high in investment performance. The website said that, as of June 30, 2013, MESP produced the sixth-best one-year investment performance among all 529 college savings plans nationwide. MESP also achieved the tenth-best three-year performance and ninth-best five-year performance, the website determined.

Savingforcollege.com is an independent company that aims to help consumers and professional advisers better understand the challenge of paying higher education costs. It describes its rankings as potential resources for investors when selecting which 529 plans are right for them.

The website’s 529 Fee Study, based on data as of July 1, 2013, determined that families who invested $10,000 in MESP’s lowest-cost investment option would pay $255 in expenses over 10 years, lower than all but five other widely available plans. Plans offered by Louisiana, Rhode Island and South Carolina have the lowest fees but are available only to residents of those states.

Savingforcollege.com said its 529 Fee Study compares 10-year total costs of all direct-sold 529 plans (those that investors can enroll in without using a broker), using data found in official program descriptions. The cost estimates are computed based on a hypothetical $10,000 investment earning 5 percent annually and generally include the expenses of the underlying investments (such as mutual funds), program-level asset-based fees, including management and administration fees, and annual account fees.

The full rankings are available here: http://www.savingforcollege.com/529_fee_study/lowest.php.

Information on the MESP’s investment performance is available at MIsaves.com. TIAA-CREF Tuition Financing, Inc., notes that past performance is no guarantee of future results.

MESP is administered by the Michigan Department of Treasury, which chose TIAA-CREF Tuition Financing, Inc., to manage the plan in November 2000. Since then, MESP has helped more than 105,000 families invest more than $3 billion toward college. TIAA-CREF Tuition Financing, Inc., is one of the nation’s largest 529 program managers and currently manages 11 state programs, including Michigan’s. 

MESP is one of three Michigan Section 529 plans, all of which offer Michigan taxpayers a state income tax deduction on contributions and potential tax-free growth on any earnings if account proceeds are used to pay for qualified expenses. MESP can be used at any eligible college, university or trade school in the nation for a variety of qualified expenses, including tuition, mandatory equipment, fees, certain room and board costs and books. Limitations apply. See the MESP Disclosure Booklet for details.

To learn more about MESP, visit MIsaves.com or contact us at 877-861-6377.

Consider the investment objectives, risks, charges and expenses before investing in the Michigan Education Savings Program. Please visit www.misaves.com for a Disclosure Booklet containing this and other information. Read it carefully. Investments in the plan are neither insured nor guaranteed and there is the risk of investment loss.

Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state’s 529 plan.

The tax information contained herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor. Non-qualified withdrawals are subject to federal and state taxes and the additional 10% federal penalty tax.  

TIAA-CREF Tuition Financing, Inc., MESP Program Manager 


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