Assets invested in 529 college savings plans continue to surge, but many advisors caution they are not always appropriate for boomers.
The College Savings Foundation in Washington reported recently that total assets in 529 plans jumped nearly 88% in the first quarter of 2004 over the same period the year earlier, to an estimated $40 billion from about $21 billion.
The foundation estimates net new contributions to 529 plans during the first quarter totaled more than $4 billion.
These state-sponsored plans exempt taxpayers from federal income taxes on either contributions or education-related distributions from the plans. Often, the plans are also exempt from state taxation.
Robert Cusick, an advisor with Investment Insight Ltd., Cortlandt, N.Y., thinks the figures show theres clearly an increase in awareness of 529 plans.
More and more, he says, clients are coming to him and specifically asking about the 529 programs.
“Advisors are becoming aware that its relatively easy to sell, because the 529 ties in to one of clients top 2 or 3 financial goals,” Cusick says.