Sunshine State Adds 529 Plan

November 18, 2002 ( - The state of Florida has kicked off a new 529 college saving program.

The Florida College Investment Planallows parents and grandparents to invest in the markets with their potentially higher rate of return compared to Florida’s existing prepaid college plan, state officials said.

Also, unlike the prepaid plan, which generally just covers tuition, room and board, officials with the Florida Prepaid College Board said the money accumulated in the new plan can be used for everything from housing to computers. The board manages both the prepaid and the 529 programs.

Investors don’t have to be saving for a student who is a Florida resident or even one attending a Florida university or college, the officials said.

The initial fee to open an account is $25, and the account owner can contribute as little as $15 a month up to $283,000. The investment is tax-deferred, and students won’t have to pay taxes on withdrawal for legitimate educational purposes.

Parents can choose to put their money in five investment accounts:

  • stocks
  • bonds
  • balanced
  • money market
  • age based/years to enrollment investment option, whichswitches between stocks and bonds based on the age of the student and how quickly the student will need the money.

The accounts are managed by a group of private investment managers working under the Prepaid College Board’s supervision, state officials said.