An advertisement in the Anchorage Daily News last week caught my eye. "Invest up to $100,000 tax-deferred for your child's or grandchild's college education" it read. It went on to give the details about a college-investing plan that allows for substantial contributions without creating a taxable gift. The benefits touted by the advertisement are enticing except for one small detail - the plan is not an Alaska plan but is one administered by the state of Maine. It is time for Alaska to be a competitor in the market for higher education savings trusts. To that end, I have introduced House Bill 268, An Act relating to the Alaska Higher Education Savings Trust.

In 1996, Congress changed Section 529 of the tax code allowing states to create "qualified State tuition programs." These qualified programs may be set up either to purchase tuition credits or to make contributions to a savings trust account on behalf of a beneficiary. The earnings grow within the account tax deferred. When the beneficiary wishes to withdraw the money, they may only use the money for qualified higher education (including vocational) expenses. These expenses may include room, board and books as well as tuition.

Whether you are able to put away $10 a month or $50,000 over 5 years, this savings plan allows all income levels to participate in a way that's appropriate and easy. In contrast to the $500 annual limit in an Education IRA, there is no restrictive annual limit and some states allow a maximum contribution of greater than $100,000. The account usually provides three to four types of investment options varying from very aggressive to very conservative. Furthermore, the participant may change the beneficiary at any time and may even choose him or herself to be the beneficiary. Section 529 provides unprecedented flexibility and savings power.

It is vital that Alaska's education savings program be flexible and designed to maximize returns for the investor with minimal tax consequences. Not only is this important so that Alaskans are able to have meaningful savings options for their higher education, but, with a strong program, it should entice non-residents as well to invest their savings dollars in Alaska.

If you would like more information about this bill or any other, please do not hesitate to contact me. Our toll-free phone number during session is 1-877-460-3783 or you can email me at Representative_Lisa_Murkowski@legis.state.ak.us. I also have a web page you may visit for more information at, http://www.akrepublicans.org/pastlegs/murkowski.htm

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