CRAIG T. KOJIMA / CKOJIMA@STARBULLETIN.COM Hawaii residents can save for educational expenses free from federal taxes, with a new 529 plan. A proposal moving through the state Legislature would exempt the plans earnings from state taxes as well. Danmark Dela Cruz, 8, of Puuhale School, receives a $1,000 check for his college tuition. Three other Puuhale students, Katrina Campanero, Caissylyn Lloren and April Geronimo also received $1,000 each in a ceremony to mark opening the accounts.

Education savings plans
now available in Hawaii

The details

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Star-Bulletin staff

Hawaii has joined the list of states offering a 529 college savings plan.

The vehicle, named after the section of the federal tax code that creates it, gives individuals a tax break on savings designated for educational expenses. The accounts can be set up by adults for their children, grandchildren or themselves.

Earnings are exempt from federal taxes if used for a qualifying expense before 2011. Some financial analysts expect that time frame will be extended.

If it is not, earnings will be taxed at the beneficiaries' rate at the time of later distributions. A proposal now moving through the Hawaii Legislature would exempt 529 earnings from state taxes.

The Hawaii program, called TuitionEdge, is administered by Delaware Investments. The investment managing firm has contracted with First Hawaiian Bank to offer the program locally.

Regardless of their sponsoring state, 529 plans are open to all U.S. citizens and permanent residents.

More information on the Hawaii plan is available at First Hawaiian Bank or online at www.TuitionEDGE.com. Information about 529 plans nationwide is available at savingforcollege.com.

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TuitionEDGE helps save for college

The state's new TuitionEDGE program allows people a tax-deferred way to invest money for college. Administered by Delaware Investments, TuitionEDGE is being offered by First Hawaiian Bank's First Investment Center. According to the state, highlights of TuitionEDGE include:

>>	It takes $15 to open an account and $15 minimum subsequent investments.
>>	A participant can contribute $55,000 a year ($110,000 for a married couple) for a single beneficiary.
>>	The total contribution limit per account is $253,000.
>>	Federal taxes on the earnings are deferred.
>>	The person who sets up the account will control it, not the beneficiary.
>>	Withdrawals that are used for higher-education costs will not be subject to federal income tax in 2002 through 2010. Beginning in 2011, taxed withdrawals will be at the student's federal income tax rate, which is usually less than that of the account owner. (A bill before the state Legislature would make a similar change for state taxes on withdrawals.)
>>	For more information, go to www.TuitionEDGE.com.