The District of Columbia has today launched its D.C. College Savings Plan to encourages families across the nation to save for higher education. The plan features low initial contributions and provides a variety of investment options, in addition to certain tax advantages.

"With the D.C. College Savings Plan and our existing D.C. Tuition Assistance Grant Program, we now have a potent combination of tools to help make educational dreams a reality for District residents," said Mayor Anthony A. Williams.

Calvert Asset Management Company, the program manager, will provide investment management services, as well as recordkeeping and other program related services. Bethesda, Maryland-based Calvert is a subsidiary of The Ameritas Acacia Companies.

With a $100 minimum contribution, parents, grandparents, relatives and friends can set up an account for anyone - including themselves. The plan also features an initial contribution minimum of $15 for payroll deduction through participating employers or $25 for automatic contributions through a bank. For District residents, there is no charge to enroll and only a $15 annual maintenance fee. Non-residents need to pay $25 to enroll and $30 annually for account maintenance.

The plan offers three ways to invest: an age-based portfolio with five age bands that change the proportion of equity, bond and money market funds as the beneficiary reaches pre-determined ages; six single-fund options ranging from conservative to aggressive; and a stable principal investment that guarantees both a return of funds invested and a fixed rate of return of at least three percent.

Earnings are federal-tax-free as long as the money remains in the account. When funds are used to pay for such qualified higher education expenses as tuition, room and board, books and supplies at qualified post-secondary institutions - the distributions are currently exempt from federal, District, and some states' income tax.

Moreover, all participating District residents can receive up to $3,000 per taxpayer in annual District tax deductions, or up to $6,000 for married couples filing jointly where each taxpayer owns an account. 

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