DC 529 Plan Upcoming Reform

dc-college-savings-logoI wrote recently to DC Mayor Muriel Bowers asking her to reform the DC 529 Plan (DC Plan). The DC 529 College Savings Plan contains high-cost investment choices, big commissions that can unknowingly harm consumers, and unnecessary participation fees.

Earnings in a 529 account are tax-free if they are used for qualified education expenses such as tuition, books, and room and board. High-cost funds and excessive plan costs, however, eat away at these earnings and decrease the dollars available for college.

DC Treasurer and Deputy CFO Jeffrey Barnette responded on August 1st indicating that they are in the process of reforming the DC Plan! His reply is at the bottom of this entry.

The DC Office of Finance and Treasury (OFT) issued a Request for Proposals for a new provider earlier this year. The new provider is to offer passively managed index funds. The new provider’s task will also be to lower the plan’s cost to investors.

Evaluation of the responses and bids is ongoing. OFT expects to transition to the new provider by the end of 2016!

I am heartened by their response, especially because Mr. Barnette explicitly commits to have one of the best 529 Plans in the Nation.

Look for a new review of the investment options and fees when the new DC 529 Plan’s details becomes available.

I thanked him for his timely and considered response. I also indicated that I would like to participate in any public bid evaluation and/or oversight of the provider during the contract term. We’ll see what happens.

Hopefully a new DC 529 Plan provider focused on providing a better value to consumers is right around the corner.

DC OFT Response August 1 2016

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