529 Plans: New Mexico and Texas

We here at MomVesting are continuing our closer look at this great nation's 529 college savings plans. Today's menu? Some of our southernmost neighbors: New Mexico and Texas.

New Mexico

The Land of Enchantment offers up two 529 savings plans: The Education Plan's College Savings Program and New Mexico's Scholar'sEdge. Both are remarkably similar, with the main distinction between the two being that the Scholar’sEdge program is adviser-sold (aka broker-sold) and the Education Plan’s is not. With that being said, here is the rest of these two plan’s nitty gritty details:

• No residency requirement for either plan.
• There is a $294,000 maximum on contributions per beneficiary.
• Both have an initial minimum contribution of $250 for lump-sum contributions with a $25 minimum for contributions after that.
• For automatic investment, there is a $25 minimum contribution each; the Education Plan’s program also has a $75 per quarter minimum contribution.
• No enrollment or application fees.
• $25 account maintenance fees apply to both programs, but it is waived if the beneficiary or owner of the account is a resident of New Mexico or for enrollment in the automatic contribution plan. Also, with the Education Plan’s program, the fee is waived for those having all assets invested in index options.
• Contributions to either plan are deductible.

Both plans also offer both age-based and static investment options. The Scholar’sEdge program gives contributors a choice of six portfolios in the age-based option as well as six different multi-fund portfolios, eight individual-fund portfolios and one called the Capital Preservation Portfolio.

The Education Plan’s program offers up two aged-based options: one with six portfolios and mutual funds and another with five portfolios and index funds. The Education Plan’s program also has six multi-fund portfolios which are invested solely in index funds, another six multi-fund portfolios that are invested in both index and actively-managed funds, and one individual-fund portfolio called the Short Term Yield Portfolio.

Texas

New Mexico’s neighbor to the east has three 529 plans that are accepting new enrollments: two savings plans and one prepaid tuition plan. There is also another prepaid tuition plan that is currently closed to any new enrollments and appears to have an uncertain future.

The first two plans, the Texas College Savings Plan and the LoneStar 529 Plan, are remarkably similar with the main distinction being that the LoneStar Plan is an adviser-sold plan while the Texas College Savings Plan is not. Both are managed by Oppenheimer Funds, in some shape or form. Here are the main points these two plans offer:

• No residency requirements.
• There is a $320,000 account maximum per beneficiary.
• There are no enrollment, application or maintenance fees.
• For both, there is a $25 minimum contribution per portfolio; this minimum drops to $15 per portfolio with the automatic contribution plan.

Both plans offer aged-based and static investment options. For the Texas College Savings Plan static options, there are four multi-fund and two individual-fund portfolios as well as a Money Market Portfolio. The age-based options include six portfolios for each the Blended and the Index Age-Based Portfolios. The LoneStar Plan offers six underlying funds portfolios in the age-based option as well as ten individual-fund and two multi-fund portfolios.

The Texas Tuition Promise Fund is a bit different from the regular 529 savings plans we’ve been seeing so far. Here’s what you need to know about this plan:

• Allows contributors to essentially lock in today’s undergrad college tuition rates by purchasing tuition units. When the beneficiary is ready for college, three unit types (representing high four-year college, average four-year college and average two-year college costs) can be used to help pay for tuition and fees.
• Is open to Texas residents only: the beneficiary or a parent of the beneficiary must be a resident of Texas.
• Has an enrollment period of September 1st through February 28th.
• Three different contribution plans: pay-as-you-go, installment and lump sum plans.
• An initial minimum contribution of one unit with a $15 subsequent purchase minimum.
• If the fund’s investment return does not keep up with increases in the state’s tuitions and fees, then public colleges in Texas must, by law, accept less than full tuition and fees.

That's everything you need to know for Texas and New Mexico. Join us again in a few weeks for our next region's 529 overview.

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