- Posted November 20, 2014
- Tweet This | Share on Facebook
Mich. Education Savings Program's fees drop as total assets top $4B
The total value of funds invested in the Michigan Education Savings Program (MESP) has surpassed $4 billion, triggering the second drop in the state-sponsored 529 plan's administrative fees in a little more than a year.
The milestone is good news for owners of the 200,000 accounts who are saving for college through MESP, said State Treasurer Kevin Clinton.
"Each decline in fees allows more of investors' funds to go toward college savings goals and less toward management fees," Clinton said. "We're proud of the success and popularity of MESP, and we're happy to be able to pass these cost savings on to our account owners."
With total assets under management now above $4 billion, MESP's total annual asset-based fees have dropped nearly 17 percent. As a result, the fees now range from .17 to .27 percent, depending on the investment options selected in individual MESP accounts. That translates to annual costs of between $1.70 and $2.70 for every $1,000 invested.
The current decrease follows a 25 percent drop in administrative fees in October 2013, when MESP assets reached $3.5 billion. Both reductions were negotiated in the state of Michigan's contract with TIAA-CREF Tuition Financing Inc., MESP's program manager since November 2000.
"The partnership between the state of Michigan and TIAA-CREF has been beneficial for Michigan families saving for their children's higher education," said Robin Lott, executive director of MESP. "Going forward, MESP will continue to offer parents, grandparents and others a low-cost, flexible 529 college savings plan."
MESP's administrative fees have regularly been recognized as among the lowest of all direct-sold 529 college savings programs in the country in rankings by such independent research firms as Morningstar and Savingforcollege.com.
Savingforcollege.com notes that fees and expenses can have a significant impact on a college-savings fund. It offers this example: If the annual return of the underlying investments in Plan A is 7 percent, and the plan manager charges a fee of .20 percent, an investment of $5,000 will grow to $16,340 in 18 years. However, if Plan B uses the same underlying investments but the management fee is .40 percent, that $5,000 will grow to $15,798, or $542 less than Plan A.
Detailed information on the MESP's fees and expenses and investment performance is available at MIsaves.com. TIAA-CREF Tuition Financing Inc. notes that past performance is no guarantee of future results.
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 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 and some abroad for a variety of qualified expenses, including tuition, fees, certain room and board costs, books, supplies and equipment required for enrollment. Limitations apply. See the MESP Disclosure Booklet for details.
MESP officials note that, to possibly qualify for a deduction on their 2014 tax return, account holders must make contributions to their MESP account by Dec. 31.
To learn more about MESP, visit MIsaves.com or call 877-861-6377.
Published: Thu, Nov 20, 2014
headlines Oakland County
- Whitmer signs gun violence prevention legislation
- Department of Attorney General conducts statewide warrant sweep, arrests 9
- Adoptive families across Michigan recognized during Adoption Day and Month
- Reproductive Health Act signed into law
- Case study: Documentary highlights history of courts in the Eastern District
headlines National
- Judge is accused of using racial slur, vulgar terms and ‘libtard’ label for employee offended by his comments
- ACLU and BigLaw firm use ‘Orange is the New Black’ in hashtag effort to promote NY jail reform
- Colorado Supreme Court considers whether habeas petition can free zoo elephants
- 4th Circuit upholds $1M sanction for law firm that tried to ‘sabotage’ federal court’s authority
- Don’t give money to law schools unless they teach originalism, conservative federal appeals judge says
- Average BigLaw partner compensation increased 26% in 2 years, reaching this high-water mark