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Regulation and Compliance > State Regulation

TIAA-CREF Offers 529 Plans To Broker-Dealers

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NU Online News Service, Oct. 18, 11:45 a.m. – The Teachers Insurance and Annuity Association-College Retirement Equities Fund, New York, says it is preparing to introduce financial advisor or commission-based versions of several of the section 529 college savings programs it manages.

The decision marks the first time that TIAA-CREF will offer any of its products to broker-dealers, although technically, the college savings plans are products of the states that sell them, a company spokesperson notes.

“Relative low cost will prevail, as there will be a downward sliding up-front load beginning at 5%, with no trailer,” says the spokesman, Jim Tolve. “Each plan’s annual management fee will be the same as its corresponding direct-sold plan, and there will be no proprietary selling agreements, so all broker-dealers will have access to it.”

TIAA-CREF manages 13 of the state-sponsored college savings programs and has been selling them directly to consumers to date. TIAA-CREF Tuition Financing, Inc., which manages TIAA-CREF’s advisor programs, will now begin to make them available to broker-dealers, investment advisor firms, and banks throughout the country, the company says.

For starters, the company has introduced the 529 programs offered by Mississippi and Missouri.

Its advisor programs extend the marketing strategy behind its corresponding direct-sold programs in that each follows a state-centric sales approach, the company says.

“We and the states whose programs we manage firmly believe and recommend that regardless of where they live, individuals interested in a 529 savings plan should consider their home state’s plan first,” says Tim Lane, vice president of TIAA-CREF Tuition Financing, Inc. explains. “We do so because of tax and other advantages that many states offer only to their own residents.”

For instance, Mississippi allows annual tax deductions of up to $10,000 on contributions by the state’s residents to its 529 plan, while Missouri features an $8,000 maximum deduction per individual.

“To this end, the Mississippi and Missouri advisor programs, as well as future ones we launch, will be actively marketed to residents of the respective state,” Lane says.

TFI’s advisor programs will include eight investment options: growth and income, equity index, large-cap value index, small-cap blend index, international equity, bond, balanced and a guaranteed option, with the same 3% minimum annual return and the same annually-set crediting rate as offered through TIAA-CREF’s corresponding direct-sold programs.

The annual investment management fee for each Advisor Program will also be the same as for the corresponding direct-sold program, all of which are below 1%, TIAA-CREF says, and there will be no sales fees.

TIAA-CREF also manages 529 plans for California, Connecticut, Georgia, Idaho, Kentucky, Michigan, Minnesota, New York, Oklahoma, Tennessee and Vermont, although it has not yet announced commission-based versions of those state plans.


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