Benefits February 5, 2024

529, ABLE Qualified Tuition Plans Reach $470B After Big Q4 Inflows

In 2023’s fourth quarter, the number of tax-preferred education savings and prepaid accounts rose to 16.4 million.

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An estimated $2.1 billion in net assets went into qualified tuition plans, better known as 529 savings plans, in the fourth quarter of 2023, bringing the total market to 16.4 million accounts with $471 billion in assets, according to data from ISS Market Intelligence.

Inflows in Q4 2023 were higher than those in Q4 2022, showing continued strong demand for the accounts, according to data from ISS Market Intelligence, which, like PLANSPONSOR, is owned by ISS STOXX.

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“The increase from 4Q 2022 to 4Q 2023 highlights that usage continues to increase, as the fourth quarter is when parents make year-end contributions,” Paul Curley, director of 529 research at ISS Market Intelligence says. “The overall outlook for 529s continue to brighten, especially with the expansion of qualified expenses to certain types of rollovers from 529s to Roth IRAs. As 529s expand from a product for education financial planning to retirement financial planning in 2024, we expect new energy by new stakeholders to drive growth.”

The Q4 inflows into education savings plans were deposited before provisions of the SECURE 2.0 Act of 2022 that go into effect this year. The SECURE 2.0 Act now allows funds from an established 529 account to be transferred, tax-free, to a Roth IRA belonging to the beneficiary of the 529 account.

Overall, in Q4 2023, 15.5 million accounts invested $447 billion in assets in 529 education savings plans; 900,000 accounts invested $24 billion in assets in 529 prepaid tuition plans; and 162,969 accounts invested $1.74 billion in assets in 529A ABLE (Achieving a Better Life Experience Act of 2014) accounts, according to the ISS Market Intelligence report.

The five largest providers, by assets, of 529 plans, based on the ISS data for Q4 2023, controlled more than 71% of the national market. The firms and their share of the 529 account universe are as follows:

  • Ascensus (program administrator in 16 states): $121.6 billion AUM, 27.2% market share;
  • American Funds (administrator in Virginia): $85.7 billion AUM, 19.2% market share;
  • TIAA (administrator in 7 states): $41.5 billion AUM, 9.3% market share;
  • Fidelity (administrator in 6 states): $41 billion AUM, 9.2% market share; and
  • Union Bank & Trust (administrator in 3 states): $27.5 billion in AUM, 6.2% share.

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