HARRISBURG (November 20) – Pennsylvania State Treasurer Robert P. Casey, Jr. has chosen two of the most respected leaders in the college savings marketplace to overhaul Pennsylvania’s direct-sold 529 Investment Plan. Effective immediately, Valley Forge-based Vanguard will replace Delaware Investments as the investment manager and distributor of Pennsylvania’s 529 Direct Investment Plan. Upromise Investments, Inc. will provide recordkeeping and administration of the Plan.
Vanguard currently offers investment options in 18 state 529 plans totaling more than $14 billion in assets. Upromise currently administers 529 college savings accounts for more than one million investors with combined assets under administration of more than $13 billion.
“Vanguard is a trusted Pennsylvania brand with a reputation for integrity,” Casey said. “Vanguard’s investment performance, superior service and low costs, combined with Upromise’s technical expertise and dedication to helping families save for college, will help make Pennsylvania’s new 529 Direct Investment Plan among the very best in the country.”
Vanguard principal John Heywood said, “Vanguard is pleased to be selected by Treasurer Casey to provide our low-cost, broadly diversified investments to the state’s direct-sold 529 college savings program. Vanguard is an experienced 529 provider, and our education specialists look forward to helping the plan’s participants with their college planning needs.”
Pennsylvania’s new 529 Direct Investment Plan will give college savers the flexibility to choose from among 13 investment options – three age-based portfolios, in which money is automatically moved to more conservative portfolios as the beneficiary approaches college age, and 10 individual portfolios, including a socially responsible equity portfolio, which offer investment choices of stock funds, bond funds and a money market fund.
In contrast to many 529 plans, there will be no annual account fee and all of the plan’s investment options, except the socially responsible portfolio, will have a 0.70% management fee. The socially responsible portfolio’s management fee will be 0.75%.
“In partnering with Vanguard and Upromise, Pennsylvania has created one of the most competitive, low-cost, high-value college savings plans in the market today,” said James J. Fadule, president, Upromise Investments, Inc. “We are thrilled to help families in Pennsylvania reach their college savings goals.”
Earlier this year, Casey selected Upromise Investment Advisors, LLC, to replace Delaware Investments as the provider of administrative services for Pennsylvania’s other 529 option known as the Guaranteed Savings Plan (GSP), a college savings plan that allows families to purchase future tuition credits at today’s prices.
Both the GSP and the Direct Investment Plan provide special tax benefits for Pennsylvania families and are partnered with the free Upromise® rewards service.
Upromise® rewards service helps families save and pay for college by earning cash back on qualified purchases from some of America’s leading companies, including 20,000 grocery and drug stores, 14,000 gas stations, 8,000 restaurants, thousands of retail store locations and more than 400 online shopping sites. Upromise’s partners include Citi®, Coca-Cola®, Kimberly-Clark, Exxon Mobil, McDonald’s®, Lancome.com, Target.com, and hundreds of others. Upromise® rewards currently has more than 596,000 members in Pennsylvania.
“Every penny a family saves for college now reduces the amount of money they may have to borrow in the future,” Casey said. “Our partnership with Upromise makes it easy for a family to turn a portion of their everyday spending into additional college savings.”
So-called 529 college savings plans like Pennsylvania’s GSP and Direct Investment Plan are a tax-smart way for families to save for college. Not only are contributions to these 529 plans deductible up to $12,000 per beneficiary, per year on state income tax returns, but earnings on 529 plans also grow tax-free. For married couples, contributions up to $24,000 per beneficiary are deductible provided that each spouse has taxable income of at least $12,000.
In addition, withdrawals from 529 plans, when used for qualified higher education expenses like tuition, room and board, and books, are exempt from all state and federal income taxes. The money saved in a Pennsylvania 529 plan may be used at most public and private colleges, as well as many career schools in the U.S. and abroad.
For more information about Pennsylvania’s new 529 Direct Investment Plan, with investments by Vanguard, go to www.pa529direct.com or call (800) 294-6195. For more information about the Pennsylvania Guaranteed Savings Plan, log on to www.tapfacts.com or call (800) 440-4000.
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