Fee cut in Missouri MOST plan will help parents saving for college
Missouri’s college savings plan just got a little cheaper, and thus more attractive to thrifty parents and grandparents.
State Treasurer Scott Fitzpatrick announced June 17 that he had negotiated a fee reduction with Ascensus, the Pennsylvania company that manages Missouri’s MOST 529 plan.
Ascensus’ program management fee will drop from 0.19% to 0.16% on Wednesday, and will fall to 0.14% within five years. Fitzpatrick said in a statement that savers “will keep more of their investment earnings in their 529 account, making it a little bit easier for Missourians to save for education.”
MOST offers several investment choices. The popular age-based portfolio invests in Vanguard index funds, which carry expenses of 0.04%. The all-in cost of the age-based option, therefore, will drop to 0.20% from 0.23%.
Savers get a state income tax deduction for contributions to MOST, and account earnings are tax-free as long as they’re used to pay for college. The MOST plan began in 1999.
Morningstar considers expenses when it rates college savings plans, and it gave MOST a bronze rating last year.
The fee cut may not be enough to win a top-notch gold rating. The age-based portfolios in Illinois’ gold-rated Bright Start plan, for example, have total expense ratios as low as 0.12%.
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