529 assets spiked in 2Q, but still were off '08 levels

Assets in Section 529 college savings plans are beginning to recover from last year's sharp drop, climbing to an estimated $98.6 billion in the second quarter, up 15% from first quarter assets of $85.9 billion.
AUG 17, 2009
Assets in Section 529 college savings plans are beginning to recover from last year’s sharp drop, climbing to an estimated $98.6 billion in the second quarter, up 15% from first quarter assets of $85.9 billion. Despite the recent improvement, however, 529 assets levels are 11% lower than they were one year ago, when there $110.6 billion in these plans, according to data from the Financial Research Corp. of Boston. Net new cash in the plans also improved dramatically in the second quarter, rising to an estimated $2.4 billion, from $1.7 billion in the first quarter. But a year-over-year comparison shows that net new cash, or gross sales minus redemptions, were down 41% from last year’s the second-quarter total of $4.1 billion, according to FRC. The latest figures are a “positive sign for the industry,” according to Bridget Bearden, a research analyst for FRC. “Despite the economy and unemployment reaching 10%, we’re seeing that people are still able to contribute to 529 plans,” Ms. Bearden said. “And the quarter-to-quarter increases might signify a return to the sales cycle pattern of the past.” The market’s upswing in the last quarter has helped diminish losses incurred last year, said Peter Mazareas, chief executive of Nahant, Mass.-based Strategic Advancement Group Inc. and vice chairman of the Washington-based College Savings Foundation. “If people didn’t have to take a distribution last year, they feel better and they are continuing to contribute regularly, if not cautiously,” Mr. Mazareas said. “We’re seeing a relatively small number of non-qualified distributions, where people take money out of accounts because of fear. Most people have age-based accounts, and they are staying in.” The estimated total assets in 529 plans at the end of last year were $88.5 billion, down from $112 billion at the end of 2007.

Latest News

Advisor moves: Raymond James lands $1.25B team as Merrill loses two
Advisor moves: Raymond James lands $1.25B team as Merrill loses two

Iowa's Greenwood Wealth Partners exits D.M. Kelly as UBS and Ameriprise win Merrill Lynch recruits in California and Florida

Never a losing day: CFTC alleges $950 million forex Ponzi scheme
Never a losing day: CFTC alleges $950 million forex Ponzi scheme

Less than 1% of pool funds went to actual trading, CFTC says

Fintech bytes: Northwestern Mutual picks Jump for enterprise AI
Fintech bytes: Northwestern Mutual picks Jump for enterprise AI

Plus, SEIA builds a governed data foundation for its in-house AI and Snappy Kraken debuts a read-only marketing coworker for advisors.

People moves: AllianceBernstein names Onur Erzan as next CEO
People moves: AllianceBernstein names Onur Erzan as next CEO

Broadridge, Wedbush and Alaris Acquisitions have also filled senior wealth management roles with hires from J.P. Morgan, Osaic and SageView.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains