Monday, November 08, 2004

URGENT MEMORANDUM

TO: Area Media

FROM: Mimi Cunningham

DATE: Nov. 8, 2004

RE: UNCW Study Shows Section 529 College Savers May be Missing out on Big Tax Savings and Earning Lower Returns While Brokers Benefit

Learn more at a Press Briefing, 11 a.m. Tuesday, Nov. 9 Alderman Hall 215, UNCW Campus

Taxpayers have invested more than $54 billion in tax-deductible Section 529 state-sponsored college savings plans, a figure expected to rise to $400 billion by 2010. Yet these funds are not regulated by the Securities and Exchange Commission, and they have been criticized for high management fees and lower returns. Congress, the SEC and the National Association of Securities Dealers (NASD) are investigating unethical sales practices.

Two UNCW accounting professors have completed the first study ever conducted that documents concerns over the influence of tax and non-tax factors on the 529 plan investor’s choices. Their study shows that Section 529 college savers may be missing out on significant tax savings and earning lower returns while federal and state tax subsidies accrue to the mutual fund distributor and brokers rather than benefiting the taxpaying investor.

Please join Raquel Meyer Alexander and LeAnn Luna, both assistant professors of accounting at UNCW’s Cameron School of Business, for a press briefing about their findings and how the public can benefit from what they have learned. This is truly “news you can use” for anyone interested in saving for college. Join us at 11 a.m. Tuesday, Nov. 9 in Alderman Hall 215 on the campus of UNCW.

Their study will be presented Sunday, Nov. 14 at the National Tax Association Conference in Minneapolis. If you have questions, please call me at 910/962-3171 or e-mail me at cunninghamm@uncw.edu.