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Board Sets New Rules For 529 Advertisements

Due to a new requirement for consistent presentation of performance data in broker/dealers' and municipal securities dealers' ads for 529 college savings plans, picking a college plan has just become a little bit easier.

The Municipal Securities Rulemaking Board (MSRB) rule came into effect on Dec. 1, requiring performance figures in advertisements to be limited to average annual return, current yield, tax equivalent yield and after-tax return. Ads that present data must also include maximum sales loads or any other recurring fee. The life of a municipal fund securities issue should be measured from when the issuer first issues the securities.

Advertisements for 529s must now state that performance data is historical and include a toll-free number or Web site where investors can find the most recent performance data, while 529 marketing materials must include data from the latest month-end. The requirements bring 529 ads in line with the Securities and Exchange Commission's Rule 482 for mutual funds.

Before the rule came into effect, it was difficult for individuals to choose a plan without undertaking major research at a commercial site. Now consumers have easy access to even more comparative data.

"Anytime consumers see 529 information presented in a consistent form, they are reassured that the programs are trying to do a good job in following the regulations," Joe Hurley, president and founder of told Dow Jones.

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