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Survey: Gen X 529 Market Has Growth Potential

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NU Online News Service, April 12, 2004, 1:14 p.m. EDT – Members of Generation X could prove to be a good market for 529 college savings plans.[@@]

MFS Investment Management Boston, Boston, draws that conclusion from results of an informal Web survey it conducted last spring.

When MFS, a unit of Sun Life Financial Inc., Toronto, surveyed 307 financial advisors about the 529 plan market through the Web last spring, it found that the advisors believe that only about 21% of their Gen X clients are saving for college.

More than half of Gen X consumers now have children under age 18, MFS notes.

But 19% of the advisors’ Gen X clients are using 529 plans, and that means that about 90% of the Gen X clients that are saving for college at all are using 529 plans.

More than one-third of boomer clients are using 529 plans, but many boomer clients who are saving for college are using other vehicles, MFS reports.

Participating advisors told MFS that many “mature” clients see 529 plans as estate-planning vehicles.

MFS uses 1909 and 1945 as the cutoff dates for its “matures” age category, 1946 and 1964 as the cutoff dates for its “baby boomer” category, and 1965 and 1978 as the cutoff dates for its “Generation X” category.

Section 529 of the Internal Revenue Code gives consumers the ability to deduct contributions to 529 plans from taxable income. Children, grandchildren and other beneficiaries can withdraw the plan assets to pay for qualified educational expenses without paying income taxes on the distributions.