States Offer Savings Accounts for 529 Investors

More states are offering conservative options in their 529 plans, some, such as Utah, even now including FDIC-insured savings accounts. Unlike other states’ bank-deposit products, Utah doesn’t require a minimum contribution.

“Nowadays, people are much more concerned about volatility and savings,” Lynne Ward, director of the $2.1 billionUtah Educational Savings Plan told The Wall Street Journal. Not only are investors gravitating toward conservative investments, such as bond funds and Treasuries, but some are even cashing out, Ward said.

In Ohio, 529 assets in bank-deposits have doubled to $175 million in the past 12 months, and in Virginia, they jumped 62.5% in December alone.

According to SavingforCollege.com, a 529 plan with a 60% allocation to equities in 2008 experienced a median loss of 25.61%.