After surging 20% in 2004, net new flows into 529s remained flat in 2005, The Wall Street Journal reports. State-sponsored 529 plans took in 13.72 billion in 2004 and $13.69 billion last year.
As a result, states are cutting their administrative fees and trying to increase competition among fund managers by renegotiating their contracts. The increased rivalry is causing managers to lower fees and increase the number of investment choices available.
But financial advisers note that investors' interest in 529s has been damaged by those brokers, such as Ameriprise Financial, that recommended funds in its lineup, rather than steering investors to funds that would have offered them a tax break in their own state. In addition, Congress has not extended 529 tax breaks that are set to expire in 2010.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.