Rep. Michael Oxley, a co-sponsor of the 2002 Sarbanes-Oxley accounting industry reform legislation, has set his sights now on what he calls high fees parents pay to save for college through state-run 529 plans.
Bloomberg reported this week that Oxley, chairman of the House Financial Services Committee, said he may call for hearings on the regulation of 529 plans since they involve "perhaps one of the most important decisions a parent has to make -- that is, creating enough capital for their kids"' to go to college.
"There is an opportunity, I think, for Congress, the SEC and the states to work in a cooperative way to make certain those people who have entrusted the state with their money for a period of time have the confidence of knowing it's being well taken care of," Oxley said at a conference of state attorneys general Tuesday in Washington.
The Securities and Exchange Commission has indicated that the fees parents pay to invest in the plans may offset the widely publicized tax benefits. SEC Chairman William Donaldson has formed a task force to look at the 529s, which are offered by states and invest in mutual funds, Bloomberg reported, adding that the 529 name comes from a section of federal tax code.
"The current state of affairs with respect to 529 plans is complicated and likely difficult for parents to understand,'' Donaldson said in a letter to Oxley, who asked about reports of high fees charged by the plans.
Congress created the 529 plan option in 1990 and now there are about 4.2 million plans overseeing $35 billion in investments, according to the National Association of State Treasurers.
The SEC currently has no jurisdiction over the plans because they are administered by states and not regulated by federal securities law except where anti-fraud rules apply to those who buy and sell securities on behalf of the plans.