Steelman seeks bids for MOST management

Through MOST, the state’s tax-advantaged 529 college savings plan, Missouri serves as trustee of approximately $750 million owned by 80,000 account holders, according to a news release from Steelman’s office.

Management of MOST has not been rebid since the program’s inception in 1999.

“Our goal is to make Missouri’s 529 plan the best in the nation,” said Steelman, who serves as chairman of the Higher Education Savings Board, in the release. “This (request for proposal) is an essential step in meeting that goal and in helping every family take full advantage of tax breaks and expanded investment opportunities to help pay for their children’s higher education costs.”

Under the Missouri 529 plan, annual contributions of up to $8,000 for individual taxpayers and $16,000 for married couples filing jointly are deductible from income on which state income taxes are paid. Earnings on those investments also are exempt from state and federal taxes as long as the funds are used to pay for eligible college expenses. The federal exemption on earnings is set to expire in 2010, but might be extended by Congress.

The RFP contains provisions for low-cost direct investments, which typically involve investments into index funds, and adviser-assisted options to allow investment into actively managed funds or other investment vehicles. The RFP encourages proposals to include multiple fund families to increase consumer choices among funds, and an open architecture to include new fund families or other investment options at a later date.

“Above all, we want to ensure the safety of investments and to make certain that families get what they pay for in selecting a college savings plan,” Steelman said.

Prospective program managers will have until Oct. 31 to file bids to manage the funds. Steelman and the Higher Education Savings Board will make a final selection by Dec. 31, with the awarded contract to be in effect for five years.

The current contract is set to expire May 9, 2006. By completing the bid process by the end of December, any transition between program managers could be completed without any inconvenience to account holders before the current contract ends.

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