Assets in 529 college savings plans swelled to an estimated $52.3 billion for the fourth quarter of 2004, up 15.8% from an estimated $45.1 billion at the end of the third quarter of 2004. The data was reported by Financial Research Corp. (FRC) and released Monday by the College Savings Foundation (CSF).
529 college savings plans are offered on a state-by-state basis and provide tax-breaks to investors, helping them cover college costs. David Pearlman, CSF chairman, noted that assets in 529 savings plans are up nearly 50% on a year-over-year basis. "We continue to be hopeful that Congress will show its support for the education savings efforts of millions of American families by making permanent the tax-free treatment of qualified distributions from 529 plans," Pearlman said. The tax-free treatment of distributions from 529 savings plans is expected to expire on Dec. 31, 2010.
Estimated net new contributions of 529 savings plans for the fourth quarter of 2004 rose to $4.6 billion from $2.2 billion in the previous quarter, and $3.8 billion in the fourth quarter of 2003. For 2004, net new contributions stood at $13.8 billion, up 21% from $11.4 billion in 2003.