COLLEGE SAVINGS 101

Savingforcollege.com

12 states offering FDIC-Insured 529 plan options
http://www.savingforcollege.com/articles/12-states-offering-fdic-insured-529-plan-options-663

Posted: 2014-08-12

by Kathryn Flynn

It’s been less than a decade since the global economic downturn began and although some say a recovery is in sight, many Americans continue to seek conservative investment options. This also applies to families who are looking to save for college with 529 plans. Parents and grandparents who have witnessed their retirement accounts or other savings get wiped out by the Great Recession may be hesitant to leave their child’s education fund at the mercy of volatile stock or fixed income markets.

In a recent survey, Savingforcollege.com asked readers about FDIC insured 529 plans and found that only 22% of respondents were aware that they existed. However, 61% of respondents indicated that they might be interested in an FDIC insured plan. Those who weren't interested were generally looking for a higher rate of return, but those who were interested cited reasons such as "The protection guaranteed by the insured plans is comforting."

Some states have responded to this demand by offering 529 plans options that are insured by the Federal Deposit Insurance Corporation (FDIC), including savings accounts and bank certificates of deposit (CDs). These accounts have less potential for growth than other more aggressive options, but your savings are generally protected if markets take a hit. With an FDIC-insured 529 plan, investments are backed by the full faith and credit of the United States government up to certain limits in the event of a bank failure. This is also an attractive feature for families with a relatively short time horizon. If their child is approaching or has already started college, they can take advantage of the tax benefits and flexibility of a 529 college savings plan without risking their principal investment.

States Offering FDIC Insured 529 Plan Options

1. Arizona Family College Savings Program
FDIC-Insured Options:

  • Variable rate CD
  • CD with an interest rate linked to the S&P 500 Index
  • Fixed rate CDs with one-year or three-year maturities
  • High-yield savings account

2. Smart Choice College Savings Plan (Colorado)
FDIC-Insured Options:

  • One-year time savings account
  • Money market savings account

3. Idaho College Savings Program (IDeal)
FDIC-Insured Option:

  • Sallie Mae High-Yield Savings Account

4. Indiana (IN) 529 College Savings Plans
FDIC-Insured Options:

  • Variable rate CD
  • CD with an interest rate linked to the S&P 500 Index
  • Fixed rate CDs with one-year or three-year maturities
  • High-yield savings account
  • Sallie Mae High-Yield Savings Accounts

5. NextGen College Investing Plan (Maine)
FDIC-Insured Option:

  • Interest-bearing FDIC-insured bank account at Bank of America, N.A.

6. Montana Family Education Savings Program – Bank Plan
FDIC-Insured Options:

  • Variable rate CD
  • CD with an interest rate linked to the S&P 500 Index
  • Fixed rate CDs with one-year or three-year maturities
  • High-yield savings account

7. Nebraska Educational Savings Trust
FDIC-Insured Option:

  • Savings account held at the First National Bank of Omaha

8. SSgA Upromise 529 Plan (Nevada)
FDIC-Insured Option:

  • Sallie Mae High-Yield Savings Account

9. College Advantage – Ohio’s 529 Saving’s Program
FDIC-Insured Options:

  • Fifth Third Bank Savings Account
  • Fifth Third Bank 529 Certificates of Deposit (CDs)

10. Utah Educational Savings Plan (UESP)
FDIC-Insured Option:

  • FDIC-insured savings held in trust by UESP at Sallie Mae Bank and U.S. Bank

11. CollegeWealth Virginia 529 College Savings Plan
FDIC-Insured Option:

  • FDIC-insured deposit accounts with participating financial institutions

12. Edvest Wisconsin’s College Savings Plan
FDIC-Insured Option:

  • Bank CD Portfolio issued by banks with a main, home or branch office located in Wisconsin

It’s been less than a decade since the global economic downturn began and although some say a recovery is in sight, many Americans continue to seek conservative investment options. This also applies to families who are looking to save for college with 529 plans. Parents and grandparents who have witnessed their retirement accounts or other savings get wiped out by the Great Recession may be hesitant to leave their child’s education fund at the mercy of volatile stock or fixed income markets.

In a recent survey, Savingforcollege.com asked readers about FDIC insured 529 plans and found that only 22% of respondents were aware that they existed. However, 61% of respondents indicated that they might be interested in an FDIC insured plan. Those who weren't interested were generally looking for a higher rate of return, but those who were interested cited reasons such as "The protection guaranteed by the insured plans is comforting."

Some states have responded to this demand by offering 529 plans options that are insured by the Federal Deposit Insurance Corporation (FDIC), including savings accounts and bank certificates of deposit (CDs). These accounts have less potential for growth than other more aggressive options, but your savings are generally protected if markets take a hit. With an FDIC-insured 529 plan, investments are backed by the full faith and credit of the United States government up to certain limits in the event of a bank failure. This is also an attractive feature for families with a relatively short time horizon. If their child is approaching or has already started college, they can take advantage of the tax benefits and flexibility of a 529 college savings plan without risking their principal investment.

States Offering FDIC Insured 529 Plan Options

1. Arizona Family College Savings Program
FDIC-Insured Options:

  • Variable rate CD
  • CD with an interest rate linked to the S&P 500 Index
  • Fixed rate CDs with one-year or three-year maturities
  • High-yield savings account

2. Smart Choice College Savings Plan (Colorado)
FDIC-Insured Options:

  • One-year time savings account
  • Money market savings account

3. Idaho College Savings Program (IDeal)
FDIC-Insured Option:

  • Sallie Mae High-Yield Savings Account

4. Indiana (IN) 529 College Savings Plans
FDIC-Insured Options:

  • Variable rate CD
  • CD with an interest rate linked to the S&P 500 Index
  • Fixed rate CDs with one-year or three-year maturities
  • High-yield savings account
  • Sallie Mae High-Yield Savings Accounts

5. NextGen College Investing Plan (Maine)
FDIC-Insured Option:

  • Interest-bearing FDIC-insured bank account at Bank of America, N.A.

6. Montana Family Education Savings Program – Bank Plan
FDIC-Insured Options:

  • Variable rate CD
  • CD with an interest rate linked to the S&P 500 Index
  • Fixed rate CDs with one-year or three-year maturities
  • High-yield savings account

7. Nebraska Educational Savings Trust
FDIC-Insured Option:

  • Savings account held at the First National Bank of Omaha

8. SSgA Upromise 529 Plan (Nevada)
FDIC-Insured Option:

  • Sallie Mae High-Yield Savings Account

9. College Advantage – Ohio’s 529 Saving’s Program
FDIC-Insured Options:

  • Fifth Third Bank Savings Account
  • Fifth Third Bank 529 Certificates of Deposit (CDs)

10. Utah Educational Savings Plan (UESP)
FDIC-Insured Option:

  • FDIC-insured savings held in trust by UESP at Sallie Mae Bank and U.S. Bank

11. CollegeWealth Virginia 529 College Savings Plan
FDIC-Insured Option:

  • FDIC-insured deposit accounts with participating financial institutions

12. Edvest Wisconsin’s College Savings Plan
FDIC-Insured Option:

  • Bank CD Portfolio issued by banks with a main, home or branch office located in Wisconsin

 

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