NextGen Program Allows Couples to Contribute
More Than $100,000 for Future Education Expenses
PRINCETON, N.J., Aug. 5 /PRNewswire/ -- Merrill Lynch today became the
first full-service securities firm to offer a "529" college-investing program
through the introduction of the NextGen College Investing Plan, providing all
Americans with a new, tax-advantaged way to help meet the rising costs of
higher education.
Also known as qualified state-tuition plans, 529s were made possible by
recent tax law changes and generally allow individuals to contribute more
money towards higher-education savings than any other tax-advantaged
college-investing vehicle. The NextGen Plan, sponsored by the Finance
Authority of Maine, is available through Merrill Lynch and can be used for
expenses at any accredited post-secondary institution in the U.S.
"The NextGen College Investing Plan can be a tremendous boost to American
families as they strive to meet growing college costs," said Allen N. Jones,
Merrill Lynch Senior Vice President and Director, Private Client Marketing.
"Recent Merrill Lynch research has found that Americans are more concerned
than ever about their ability to pay for their children's college education,
yet few are aware of this new tax- advantaged investment vehicle. By
providing access to the NextGen plan, Merrill Lynch can help families
accumulate more funds for education, enabling them to realize the American
dream of sending their children to college."
For the past 20 years, college costs have outpaced the general rate of
inflation and, for many families, the expense of a college education is the
single largest financial goal on their horizon. Current estimates predict
that when today's newborn child reaches college-enrollment age, the cost of
attending a public institution could easily exceed $80,000 and more than
$200,000 at a private university.
Merrill Lynch's recent college-savings survey, conducted by International
Communications Research, found that 60% of respondents are very concerned
about being able to afford the cost of a college education when their children
are ready to attend. Yet despite such concerns, only 7% were familiar with
the benefits of "529" college-investing plans.
For the first time," added Mr. Jones, "families across the nation will
have access to one of the best college-investing vehicles available and the
vast financial-planning resources of Merrill Lynch's 14,000 Financial
Consultants."
How the Plan Works:
Working with a Merrill Lynch Financial Consultant, an individual can
participate in the NextGen College Investing Plan on behalf of a child or
relative beneficiary. A NextGen plan is set up and contributions are invested
based on an asset-allocation strategy that considers the plan beneficiary's
college-enrollment time-frame.
Under the NextGen plan, an individual can set up an automated investment
schedule and contribute as little as $50 a month. When the beneficiary enters
college, account balances can be withdrawn and used for college expenses.
As provided in Section 529, the NextGen plan generally permits individuals
to contribute up to $50,000 (and couples up to $100,000) per beneficiary in a
single year without federal gift-tax consequences, provided no additional
gifts are made to the beneficiary for a five-year period. Participation in
the NextGen plan also provides participants with the following benefits and
features:
-- TAX-ADVANTAGED SAVINGS: Investment earnings grow federal
income-tax-deferred and are taxed at child's tax rate if withdrawn for
qualified higher-education expenses;
-- PROFESSIONAL INVESTMENT MANAGEMENT: All contributions are invested in
age-tailored portfolios of Merrill Lynch mutual funds and short-term
money market instruments;
-- CONTRIBUTION FLEXIBILITY: Low investment minimums ($250 initial
investment or $50 per month) and high contribution limits provide more
opportunity for college savings;
-- WIDESPREAD USAGE: Account balances can be used for tuition and expenses
at any accredited post-secondary institution in the U.S. (public or
private, graduate, community colleges, vocational-education schools);
-- CONTROL: Contributors can change the beneficiary or withdraw the money
if the child does not attend college;
-- ESTATE PLANNING: Assets contributed to an account are removed from the
contributor's estate.
The Merrill Lynch Private Client Group serves more than four million
households, small- to-mid-sized businesses and regional financial institutions
using a planning-based financial-services approach.
Among the many services available to our clients are brokerage, personal
credit, insurance, home financing and trust services, as well as retirement
and group employee benefit services, and business financing. Merrill Lynch
clients are served by more than 18,500 Financial Consultants in more than
900 branch offices worldwide. As of the end of the second quarter, investors
had entrusted Merrill Lynch with more than $1.5 trillion in account assets.
SOURCE Merrill Lynch
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Related links:
http://www.merrilllynch.com
Company News On-Call:
http://www.prnewswire.com/comp/555800.html or fax,
800-758-5804, ext. 555800
CONTACT:
Wendell Collins, 609-282-4089,
Wendell_Collins@ml.com, or Katie Hynes, 609-282-3121,
Katie_Hynes@ml.com, both of Merrill Lynch
NOTE TO EDITORS: For a copy of Merrill Lynch's new research study
on college savings trends, conducted by International
Communications Research, please call 609-282-3261.
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