MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Tuesday, December 10, 2002 Vanguard Will Add Employer Distribution Add Vanguard to the growing ranks of fund firms hoping to distribute 529 plans through workplaces as if they were 401(k) plans. The fund firm said today that it plans to offer its Nevada-based plan through employers in the second quarter of 2003. The move follows the lead of several providers who have hoped to turn the college savings program into the second coming of 401(k) plans. However, to date, those efforts have been held back by employers who do not have the same incentives to offer workplace college savings programs as they do to offer 401(k) programs. Unlike 401(k) retirement plans which must be employer-sponsored and which offer employees higher contributions and matches that are not a feature of retail IRA accounts, the institutional 529 plan offers no added features of a retail 529. The sale of institutional 529 plans has also come under attack because of perceived ties between the sales of the two products. In some cases, employers report lower receiving lower quotes on recordkeeping and other services if they agree to also offer a 529 plan from their 401(k) vendor to their employees. Employers are also concerned about the potential liability of offering workplace college savings programs, including the haziness of whether they would be incurring any long-term fiduciary obligations if they offer a plan. Vanguard will offer its 529 College Savings Plan run for the state of Nevada for the business. Upromise is the Nevada plan administrator, while Vanguard provides marketing, distribution, investment management and client service to the plan. The plan, which is taking new accounts as of today, offers 21 investment options, including three age-based options and five custom portfolios only offered through the program. Vanguard currently has gathered some $900 million in 529 assets in plans sponsored by Iowa, Utah, Nebraska and Virginia. It also administers 55,000 accounts with some $350 million in assets for the state of Iowa. Printed from: MFWire.com/story.asp?s=4137 Copyright 2002, InvestmentWires, Inc. All Rights Reserved |