I thought you might be interested in this.  I have no profit motive.  I am just sharing some research that I have done.

Richard Riehm
713.345.9385
Richard.Riehm@Enron.com


-----Original Message-----
From: The Riehm's [mailto:rriehm@houston.rr.com]
Sent: Sunday, December 16, 2001 1:33 AM
To: Riehm, Richard
Subject: Outstanding College Savings Plan


Are you concerned about saving for college expenses?  If you are interested
in what I have learned, read on.  If not, delete this now and save yourself
from my poor grammar.

I started my own savings program for our kids a couple years ago, but it
wasn't very tax efficient.  Up until last year, there really wasn't a very
easy way to save for college.  You basically had 2 choices:  Educational IRA
that had contributions limited to $500 per year and you didn't qualify if
you were "rich".  The other was Prepaid College Tuition programs like the
Texas Tomorrow Fund.  The prepaid tuition programs are a good deal if you
know your kid is going to go to an in state, public school because you can
lock in tuition rates now.  It doesn't cover room & board and if your kid
goes out of state or to a private school, they will gladly give you your
money back without much growth.

A couple of years ago, Congress authorized what are know as Section 529
plans.  Each state is authorized to set up their own plan, cover different
expenses, allow different investment options and charge different fees.  One
of the best web sites I found to give me a basic background and help me
compare state plans was www.savingsforcollege.com.  This web site is packed
full of information.

Some of the features that make the 529 plans great are (each state varies on
some options):
High contribution limits (current max is $251,000 per beneficiary)
The account owner maintains control (forever) and the money is moved out of
the account owner's estate.
You can switch beneficiaries to anyone else in the family from grandparents
out to first cousins.
Multiple Investment Options from 100% Equity to 100% bonds and time adjusted
portfolios.
Qualified withdrawals cover tuition, books, room & board at all
(nationwide)accredited 2 and 4 year colleges and most technical schools.
Tax free growth on qualified withdrawals.

Each state plan has it's own quirks.  Several states, including Texas do not
even have a plan set up yet.  You really have to evaluate several state
plans to figure out what is best for you.  Each state charges a management
fee for maintaining these accounts.  The fees I found varied from 0.30% to
1.05% annually based on your account balance.  Some states only allow front
loaded mutual funds and/or make you go through a broker.  This can really
add up.

I looked for a plan that had high contribution limits to cover the most
expensive schools and aid in estate planning.  A low annual management fee
was very important to me.  I was also concerned with investment options.  I
like picking my own portfolio styles.  Some states don't give you too many
options because they think they know better.  I also found a state that
allows you to switch your investment selections once a year.  Most states
currently prohibit investment changes from what was selected when you make a
contribution.  I think this prohibition was due to a tax law that was
recently revised to allow investment switching.

I decided to go through New Mexico 529 plan.  There web site is
www.theeducationplan.com/education/SS/splash.jsp.  I was able to set up my
accounts on-line in a couple of minutes each.

I think this is the best investment vehicle for saving for college.  Let me
know what you think.  If you have any questions, I would be happy to reply.

Richard Riehm
H:281.485.8708
W:713.345.9385
RRiehm@Houston.RR.com