Alabama’s 529 plan dumps Van Kampen

Alabama is switching Section 529 plan managers from Van Kampen Funds Inc. to Union Bank and Trust Co.
The state decided to switch program managers after conducting a request for proposals since the Van Kampen contract expires in June, said Pam R. Stevenson, assistant director of college savings programs for the Alabama Office of the State Treasurer.
Van Kampen has managed Alabama’s 529 plan, the CollegeCounts 529 Fund, since its inception in 2002. The plan has $660 million in assets.
Ms. Stevenson declined to comment on why the state made the change. Van Kampen spokeswoman Erica Platt declined to comment. Kevin Keller, first vice president in the marketing department of Union Bank, didn’t return a call for comment. The switch will take effect this summer, according to Alabama’s website.
Van Kampen’s ouster from Alabama marks the firm’s exit from the 529 business altogether, said Joseph Hurley, chief executive and founder of Savingforcollege.com. Most likely, Alabama made the switch to reduce fees, since that is the most common reason that states switch managers, he said.
The fees for Class A shares of Alabama’s adviser-sold 529 plan currently range from .75% to 1.82%, which is typical, if not lower than average. The direct-sold fees range from 0.4% to 1.47%, which are a bit high, Mr. Hurly said. It’s unclear what the new fee structure will be when Union Bank takes over the plan.
Standard 529 plans are trying to get their direct-sold fees down to 0.2% to 0.3%, Mr. Hurley said.