Investors are continuing to embrace 529 college savings plans, according to a new report.
The report, released by the College Savings Foundation, found that assets in 529 plans totaled $43 billion at the end of the second quarter, up 66.9% from a year ago. Net new contributions to 529 plans were $2.9 billion, up from $2.4 billion in the second quarter of 2003.
For the first half of 2004, net new contributions totaled $7 billion, up 45.8% from a year earlier.
"Investors and families continue to embrace the 529 approach, recognizing the powerful tax incentives that the plans offer for college savings," says foundation Chairman Chuck Toth.
He notes that a key tax incentive driving 529 plan growth-the federal tax-free treatment of 529 plan distributions-is set to expire on Dec. 31, 2010. "Congress can do its part to support the savings efforts of American families-and the growing acceptance of 529 plans as an effective higher education savings tool-by making the tax-free treatment of qualified distributions from 529 plans a permanent plan feature," he says.