CHICAGO — Illinois State Treasurer Michael Frerichs has announced the state is reducing fees and giving more investment choices to people saving money for college in its college savings plans.
Illinois currently offers two funds for people who work with financial planners or investment advisers on their 529 college savings plans, the Chicago Tribune reported. The plans allow people to save money for college and avoid paying taxes on any money withdrawn to pay for college.
Under the changes, people who work with advisers will be converted to a single plan with college savings program Bright Directions. Account holders won’t be required to take any action.
Frerichs said the state also will cut management fees roughly in half and will no longer charge annual fees.
People will have the option to choose from a 12 fund companies including BlackRock, T Rowe Price, Vanguard, and Chicago-based Ariel and Nuveen Asset Management. Each company carries its own fees. Currently, people can only choose Oppenheimer and Vanguard Funds.
Frerichs said the changes will make the state’s 529 plans more competitive than those offered in other states. He said the 529 plans will give families saving for college more options at a lower cost.
The changes are expected to take effect in July.
There are nearly 446,000 Illinois 529 accounts, totaling about $9 billion.