Delaware Investments will manage an investment-based Section 529 college savings plan, to be offered in addition to the TAP guaranteed savings plan, Pennsylvania State Treasurer Barbara Hafer said. Growth in such plans is free of local, state or federal tax, as of Jan. 1.

The new program is expected to begin operations in the spring, and will be available through brokers and financial advisers or directly by toll-free telephone or Web site. Delaware plans to offer an age-based investment option, which will alter the asset mix as the beneficiary approaches college, as well as fixed plans, such as all equities or all bonds, and a stable value option. Both Delaware and other mutual fund company offerings will be available to investors.

Originally, Mellon Financial Corp.’s banks and Dreyfus mutual funds were going to participate in the program. "Mellon’s subsequent decision to sell its banks caused Hafer to seek new proposals, a process that resulted in the selection of Delaware Investments," the state Department of the Treasury said in a statement. Mellon responded in a statement that it believed it would have been an excellent choice. "Its Dreyfus subsidiary is engaged in discussions with other states about developing 529 programs for them," the company said.

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