The Trouble with 529 Plans October 7, 2003, Money Magazine

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• The Trouble with 529 Plans October 7, 2003,
  Money Magazine
• More and more, states are messing up a good
  thing with fees, commissions and bum funds.
• Fund Scandal puts College Saving Plans on Alert
  Nov. 23, 2003, New York Times
• These states have also developed symbiotic ties
  to their money management firms. the companies
  have provided the states with benefits.

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What Scandals Loom in 2004 Dec. 28, 2003,
Newsday States are not putting in place adequate
oversight procedures to monitor the performance
and operation of the many, smaller replacement
managers. And whos watching the state
officials? How 529s got Stuck Jan. 2004,
Money Magazine State college savings plans were
a terrific idea. Too bad some states made bad
deals with the wrong companies.
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Treasury ProposalsFebruary 2, 2004

• Reintroduced Lifetime Savings Accounts
• Impose severe excise tax on non-qualified
  distributions
• Impose age limit on beneficiary
• Require additional administrative burdens on
  programs
• Redefine contributors status in the program

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Oxley letter to SECFebruary 4, 2004

• Fees charged by these state-sponsored plans are
  so exorbitant that they may actually outstrip the
  tax benefits that Congress has attempted to
  provide
• Chairman Oxley asked the SEC
• To explain current federal regulatory scheme.
• How disclosure for 529 plans differs from mutual
  funds.
• How states select investment managers and how
  this is disclosed.
• How fees and other costs are allocated.

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SEC Response to OxleyMarch 12, 2004

• SEC develops Chairmans Task Force on College
  Savings Plans to review Section 529 college
  savings plans and develop recommendations in
  response to Chairman Oxleys letter.
• Task Force is working to finalize their report
  and recommendations.
• No contact of state programs by Task Force.

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Congressional Hearings

• House Financial Services Subcommittee on Capital
  Markets, Insurance and Government Sponsored
  Enterprises June 2, 2004
• Senate Governmental Affairs Subcommittee on
  Financial Management, the Budget and
  International Security September 30, 2004

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Sen. Fitzgerald takes parting shots at 529s.
Lawmaker aims to end state involvement in college
savings plans November 08, 2004 Crains News
Service
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NAST / CSPN Federal Initiatives Task Force
Brian Krolicki Jay Rising Tom Wallace Jackie
Williams

• Dan Ebersole (Chair)
• Mike Ablowich
• Diana Cantor
• Randall Edwards
• Tom Graf

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Purpose

• Maintain and enhance the leadership role of the
  states
• Proactively address concerns raised by Congress,
  federal regulators, and the media about Section
  529 plans
• Coordinate NAST/CSPN activities as we advocate
  for the improvement of Section 529 plans

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Priorities

• Implementation of Disclosure Principles
• Permanency of federal tax exemption
• Higher Education Act
• SEC Task Force
• Treasury Department proposals
• Public Relations

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Functions

• Establish and maintain relationships with Members
  of Congress, regulatory, and other officials
• Share expertise with policymakers
• Assess Congressional and regulatory trends that
  impact Section 529 plans

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Functions (cont.)

• Develop policy positions that will promote,
  preserve and improve Section 529 plans
• Foster communications among the plans and serve
  as a point of contact for information related to
  federal issues
• Determine specific need for outside public
  relations and/or lobbying consultants

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What can you do?

• Leverage your state relationships
• Inform your Congressional Delegation
• Develop staff contacts
• Desired outcomes

• State leaders are aware of program and the impact
  it has on citizens
• You are viewed as the key information resource

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How do I do that?

• Engage Executive, Legislative and other state
  leaders
• Meet with Senators and Congressmen
• Talk to Legislative Directors and other key
  policy staff
• Targeted, timely follow-up

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Value of State Role

• Encourage middle- and lower-income families to
  save for higher education
• Every state offers a low-cost, direct-sold option
• States provide a range of incentives
• Consumer protection State does the homework!
• Fiduciary role