Delaware lowers fees for 529 college savings accounts
Delaware Treasury officials hope lower fees on the state’s education savings accounts entice more people to sign up.
Delaware’s 529 education savings plan helps families save for their child’s higher education.
State Treasurer Colleen Davis said the new fees that took effect this month for Delaware’s College Investment Plan will save account holders in the First State and several other states nearly $87,000 a year.
Davis said the fee reductions vary depending on which investment strategy participants select.
“If you have a target date fund, that’s where you’re actually going to see the most reduction in fees - up to 77 cents on the dollar for some of them,” she said.
Davis said she hopes the lower costs prompt more people to get accounts.
“Once an individual is going on to higher education, whether that be at a university, a community college or a trade school, they’re able to utilize those funds for any associated costs, including their tuition, their books, their housing,” she said.
Davis said the accounts are great for families saving money for their children’s educational expenses because investment earnings are income tax deferred. Qualified withdrawals are income tax free.
Davis hopes the fee reductions will prompt Morningstar, an investment research company, to boost the rating of state’s 529 plan. Delaware’s plan has had a bronze rating the past two years. Morningstar’s new ratings are expected at the end of the month.