College savings program delayed

Advertiser Staff

Residents waiting to start using the Hawai'i State College Savings Program will have to wait a little longer.

The savings program, originally set to launch in June or July, has been delayed until September or October, according to an official with the state Department of Budget and Finance.

The delay results from continuing contract negotiations with a program manager, said Scott Kami, administrator of the department's financial administration division, which will oversee the savings program. A contract has not yet been awarded.

Details of how the program will operate, such as contribution limits, are also still being discussed.

The 529 college-savings programs make early investment in higher education affordable for families by allowing earnings on the investment to grow free of federal taxes as long as the money is used at a U.S. college.

There are no limits to the income participants have, as with an Education Individual Retirement Account, and any relative may contribute to the plan.

The programs are run by individual states but open to nonresidents. States set lower and upper limits to yearly contributions and may offer incentives to residents such as a reduction in state taxes.

Accounts in the program are usually managed by private financial institutions, including investment banks and mutual funds operators. TIAA-CREF Tuition Financing Inc., for example, handles programs with 12 states including California and New York.