Investors are largely unaware of the ways President Bush’s tax plan affects investment vehicles, according to the results of a survey released today by Fidelity Investments.

Although Congress approved the plan last year, Fidelity said 85% of the investors it surveyed didn’t know that the Bush plan provides new opportunities to sock money away.

"Many Americans are only aware of the rebate checks they received last year," said Dale Bearden, senior VP of the Fidelity Brokerage Company, referring to the larger rebate checks that taxpayers saw after the tax plan was approved.

But when those who conducted the survey explained the new tax rules, most said they would take advantage of them. For example, 65% said they would likely use 529 plans to save for college after they learned that, in specific circumstances, they could withdraw funds from such accounts without tax penalties.

Marty Willis, executive VP of Fidelity’s institutional services business said that 529 plans were already an attractive option for college savers, but he expects they will become even more popular the more investors learn about the Bush plan’s affects on them.

Likewise, after learning that they can now contribute more money to their IRA accounts than in previous years, 70% said they would increase their contributions to those vehicles in 2002.

The study, conducted with the help of Richard Day Research, surveyed 1,210 adults who are saving for their children’s education or maintain IRAs or workplace-sponsored investment accounts. Those investors were questioned in November and December of 2001.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.