MO$T PROGRAM TO TOP FIVE IN U.S.

Missouri is making the most of its MO$T program, according to state treasurer Nancy Farmer.

"I was delighted to learn this week that the MO$T program was evaluated in the May issue of Money Magazine as one of the top five plans in the nation," said Farmer, who was guest speaker at the Cape Girardeau Chamber of Commerce's First Friday program at the Show Me Center Friday.

The program was founded in 1998, when Farmer was assistant state treasurer. Called "The 529 Solution" by the Internal Revenue Service, it offers significant state and federal tax benefits to ensure a brighter future for children, Farmer said.

Earnings in MO$T grow tax-deferred on the federal level. When savings are eventually used to pay college costs, earnings are taxed at the beneficiary's (student's) federal income tax rate, which will likely be lower than that of the account owner. There are no Missouri income taxes on earnings on withdrawals used to pay for college costs. Additionally, account owners living or working in Missouri can take an annual state income tax deduction of up to $8,000 per individual (up to $16,000 in total for married couples) for contributions to MO$T.

The minimum investment is only $25, or as low as $15 when using an automatic payment plan such as a payroll deductible plan. Parents can provide up to $8,000 a year to the plan, with cap of $240,000.

The funds must be used for higher education.

Investment options are managed by TIAA-CREF Tuition Financing, Inc., a subsidiary of TIAA, which is part of TIAA-CREF, a leading financial services organization and the premier pension system for colleges and universities.

James O. Pinkston, tuition financing consultant with TIAA-CREF, was also on hand the First Friday Coffee.

He said the Missouri program now has about 14,000 accounts totaling over $40 million.

The program, he said, allows parents and other participants to choose the investment strategy they are most comfortable with -- manage allocation option, guaranteed option and 100 percent equity option.

Farmer, who was elected in November as the first woman state treasurer in Missouri history, is responsible for managing the state's $18 billion in annual revenues, overseeing the state's banking services and handling state investments of almost $3 billion.

She is no stranger to the job. She served as assistant state treasurer for two years before stepping down in September 1999 to run for the top spot.

"My job was an easy transition," she told the chamber group.

She also served eight years in the Missouri House of Representatives.