TIAA-CREF is considering breaking a longstanding tradition by opening its 529 plans to outside funds. The firm only opened its 403(b) plans to outside funds last year, unveiling its first open architecture system (DCSPA, 9/26). “No decisions have been made. It’s definitely something we would consider if a state wanted it,” said Katherine Miller, a TIAA-CREF spokeswoman, who also noted that TIAA has always operated its platform with no outside funds.
Carol Heller, director of financial education for the $700 million Connecticut Higher Education Trust (CHET), said the state has asked TIAA to explore using non-proprietary funds. “It’s extremely preliminary. We don’t even have proposals on the outside funds yet from TIAA-CREF,” she said. Connecticut has plans in place to include two new proprietary investments in its 529 plan. Next month CHET will add a pure equity and fixed-income portfolio to its lineup of three other TIAA-CREF portfolios.
TIAA-CREF also plans to debut new portfolios in Oklahoma and Michigan’s 529s. The $1.2 billion Michigan Education Savings Plan, also managed by TIAA-CREF, will add proprietary aggressive and conservative managed accounts options next month, according to Brenda Griebert, regional director of education savings at TIAA-CREF. The plan currently offers an age-based managed account portfolio for investors with average risk tolerances, an all-equity portfolio and a guaranteed return account.
Michigan’s managed account portfolios are funds of funds comprised of proprietary funds, as are Connecticut’s and Oklahoma’s. “In the 529 world the most popular option is an age-based option,” Griebert said. “Typically we had one managed allocation that tried to keep pace with tuition and education.” Terry Stanton, a spokesman for Michigan’s Treasury Department, said, “We are looking at adding new investment options but are not ready to announce what we are doing. The goal is to provide more options.”
The Oklahoma College Savings Plan will add three portfolios in June. Tim Allen, deputy treasurer for policy and administration, said in addition to the plan’s TIAA-CREF-managed all-equity portfolio, balanced fund and conservative fixed-income portfolio the state will launch an age-based allocation, a 100% equity option and a guaranteed return account.