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by Stephen Parezo

February 6, 2006—Since saving for higher education can often be a daunting task that requires careful planning and a high level of commitment, Fiducial is now offering a new benefit known as the CollegeBoundfund® to help employees save for higher education expenses.

CollegeBoundfund is a flexible, tax-advantaged 529 college savings program managed by Alliance Capital and distributed by AllianceBernstein that offers employees a range of investment opportunities to meet broad investment challenges, including tax and estate planning benefits.

Assets can be used to pay for qualified expenses at any accredited institution of higher learning in the U.S. as well as some foreign institutions including undergraduate and graduate schools, most community colleges and vocational-technical schools. Qualified expenses include tuition, fees, room and board, books and other supplies.

Our goal is to offer as many different tools and benefits to employees. The 529 program was just created a few years ago so a lot of employers don’t offer it yet.

CollegeBoundfund allows contributors to make a minimum contribution per year and to set aside funds for any type of beneficiary. Contributors can also change the benefits as they go along.

While the funds are in your CollegeBoundfund account there is no federal income tax due on earnings. Distributions for qualified education expenses are also federal income tax free. There are no income limits restricting who is eligible to participate and employees can choose from a variety of options. You can continue making contributions until the total account value equals $330,690 (contributions and earnings).

According to AllianceBernstein, for a child born in 2005 you will need to save $117,773 for that child to attend a four-year public college and $285,419 to attend a four-year private college.

Plan is completely portable

Lindenmann says the account works similarly to a retirement plan where withdrawals can be made but earnings on those not used for qualified high education expenses will be taxed as ordinary income to the recipient and subject to a penalty.

For example, in the event you didn’t use this money for education because none of your beneficiaries wanted to attend college, you can withdraw the funds at any time subject to a 10% penalty but only on the amount of growth and not on the principal.

Fiducial employees will be able to enroll in the plan with no load “A” shares that are offered only through a corporate plan. This means there are no fees charged when fund shares are purchased.

“If you were to go out by yourself and enroll in this plan you would have to pay fees,” she said.

Investment options include two Age-Based Portfolios, three Fixed Allocation Portfolios and a Stable Value Portfolio. The plan also offers portability for enrollees.

“It’s completely portable because it’s your plan,” Lindenmann added. “We’re not doing it through payroll deductions. It comes directly out of your savings/checking account. The minimum contribution to the plan is $50 per month.”

To enroll in the program online, employees should visit: www.corporate.collegeboundfund.com.

Stephen Parezo is the Media Manager for Fiducial.

Whatever your small business needs, your Fiducial tax and financial professional can analyze your situation and recommend an appropriate action plan. To locate a Fiducial office nearest you on fiducial.com, see the Zip Code Locator located in the upper right hand corner of the page. Do you have a particular topic that we should be writing about that can help your business? Please send your suggestions to: stephen.parezo@fiducial.com.

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