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WASHINGTON -Credit union members may be among those concerned that the 529 college tuition savings plans they opened for their children may have too many fees to offset any tax advantages. House Financial Services Committee Chairman Michael Oxley (R-Ohio) recently wrote to SEC Chairman William Donaldson with concerns about the state-sponsored plans including disclosure and transparency issues for investors; the extent of SEC oversight of the plans; and whether high costs and fees overtake the family tax advantages intended by Congress. In a March 12th letter, Donaldson agreed “the current state of affairs with respect to 529 plans is complicated and likely difficult for parents to understand” and has established a “Chairman’s Task Force on College Savings Plans” at the SEC to study the issues more fully. A 529 is an education savings plan operated by a state or educational institution designed to help families set aside funds for college expenses. The investment grows tax-deferred and distributions to pay for the beneficiary’s college costs are exempt from federal taxes. Federal law imposes a 10% penalty on earnings for non-qualified distributions but the penalty is not assessed on principal.

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