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Prepaid Tuition A Future Flunk-Out?

This has made college savings programs, such as Coverdell accounts and 529 plans, more attractive to many. However, while these programs have important tax benefits, they do not guarantee that the account will cover college costs. Maryland, Virginia and the District all offer 529 plans.

States are struggling to find ways to make their prepaid plans more affordable. Families in Maryland will be able to buy a contract for as little as one semester at a university or one year at a community college, half the previous minimums. And those who pay over time will have more years to do so.

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This hardly solves families' college-cost problems, but Marshall noted that "it lowers the price point people can get in at. . . . They can get a foot in the door to get started" and perhaps buy more later.

The problems of prepaid tuition plans are of interest beyond the world of college attendance. If these plans can't make it, college tuition will join pensions and other societal needs in the march away from professional management and into the hands of everyday Americans.

The Bush administration sees a new "ownership society," in which we save and invest to finance these things ourselves as the way to go, but it's not clear why amateurs like us will succeed where the pros didn't.

"Phased retirement" is a concept that has been getting lots of attention recently as a way of helping boost employees' retirement income while easing problems employers may face if large numbers of experienced workers depart at once.

A problem arises, though, for workers who would like to try part-active, part-retired arrangements: If they go to part time, their pay drops, but under current rules, they can't start drawing their pensions because they are working.

Last week the Internal Revenue Service proposed new regulations that would allow employees age 59 1/2 or older to begin drawing a pro-rata share of their pension if they take part in a formal, voluntary, phased-retirement program through their employer.

The new rules would apply only to traditional "defined benefit" pensions and a certain kind of defined contribution plan called a money-purchase plan. Retirement arrangements such as 401(k)s and 403(b)s are not affected. However, most of those types of plans have less restrictive rules anyway.

The new rules do not become effective until they are issued as final, probably by next spring.

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