529 plan assets continue to grow

By National Underwriter

National Underwriter


By Warren S. Hersch

Building on a year-long expansion, funds invested in 529 college savings plans rose 1.8 percent in the second quarter of 2013, a new report shows.

Strategic Insight discloses this finding in a second quarter survey of 529 plans, with research based on primary information provided by asset managers and state agencies. Strategic Insight collects information directly for 19 out of 20 529 prepaid plans captured in the report.

The research shows 529 college savings plan assets hitting $183.5 billion at the close of the second quarter, up from the $180.3 billion recorded in the first quarter.

Since 2012, funds invested in 529 plans have continued to increase, growing from $163.6 billion in the third quarter of last year. However net inflows of funds (contributions minus withdrawals) have varied over the year, rising to $3.1 billion in the fourth quarter of 2012, then peaking at $3.3 billion in the first quarter of 2013 before dipping to $2.8 billion in the second quarter.

Since the second quarter of 2011, the survey shows, net flows of funds were negative only two times: in the third quarter of 2011, when net inflows fell to $(0.4 billion); and again in the third quarter of 2012, when the negative net inflow was $(0.8 billion).

The more recent positive net inflows, the report states, indicate that “investors are successfully using 529 plans for their intended purpose of savings and spending their savings” on qualified higher education expenses (QHEE). “From an industry asset level perspective, 529 savings plans continue to reach year-over-year all-time highs. Therefore, investor interest in 529 plans and saving for education in a tax-efficient manner continues to rise.”

Originally published on LifeHealthPro.com