Waddell & Reed Launches 529 Plan

October 2, 2001 (PLANSPONSOR.com) - Waddell & Reed, Inc launched its version of the 529 college savings plan, the Waddell & Reed InvestEd Plan, a tax-deferred method of saving for post-secondary education.

The plan, available through Waddell & Reed financial advisors, was established under the Arizona Family College Savings Program, created by the state of Arizona as a qualified state tuition program in accordance with Section 529 of the Internal Revenue Code.

Investments in 529 plans grow tax-deferred until withdrawn, and from 2002, when assets are withdrawn for qualified higher education expenses such as tuition, room and board or books, the earnings will be federal income tax free.

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Further, unlike Uniform Transfer to Minor accounts, the account owner retains control after the beneficiary reaches legal age, ensuring that the money saved is used for education expenses.


The plan?s portfolios have been organized as a fund of funds and are customized based on the beneficiary’s college time horizon and the appropriate level of investment risk for that time horizon, specifically:

  • a greater exposure to equity investments when the beneficiary is between ages 0 and 8,
  • a more balanced exposure to equity and fixed income investments when the beneficiary is between ages 9 and 15, and
  • a greater exposure to fixed income funds when the beneficiary reaches age 16.

Account owners can opt-out of the above sequence and choose to remain in one of the three portfolios for the life of the account if desired, although such election would be irrevocable and the account owner would have to remain invested in the selected portfolio until withdrawn.