Investing February 9, 2023

529 and ABLE Account Market Tops $410 Billion

In Q4 2022 the number of tax-preferred education savings and prepaid accounts rose to more than 16 million.

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An estimated $1.5 billion in net assets went into qualified tuition plans, better known as 529 savings plans, in the fourth quarter of 2022, bringing the total market to 16 million accounts with $411 billion in assets, according to data from ISS Market Intelligence.

The inflows in Q4 2022 were lower than those in the fourth quarter of the prior three years but still show continued demand for the accounts, despite market and economic volatility, the ISS Market Intelligence data showed. ISS Market Intelligence, like PLANSPONSOR, is owned by Institutional Shareholder Services Inc. The growth in 529 savings accounts is also driving demand for education about how to use the accounts efficiently when considering tax, financial aid and estate planning, according to the ISS Market Intelligence report.

The Q4 inflows coincided with Congress passing the SECURE 2.0 Act of 2022, which makes changes to the 529 and ABLE account programs that take effect in 2024 and 2026, respectively.

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Overall, in Q4 2022, 15.1 million accounts invested $388 billion in assets in 529 education savings plans; 900,000 accounts invested $23 billion in assets in 529 prepaid tuition plans; and 137,145 accounts invested $1.253 billion in assets in 529A ABLE accounts, which are tax-advantaged savings accounts available to individuals who have been diagnosed with significant disabilities before turning age 26.

The five largest providers, by assets, of 529 plans, based on the ISS data for Q4 2022, 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, managed $105.5 billion in assets, for a 27.2% market share.
  • American Funds, administrator for Virginia, managed $74.6 billion and has a 19.2% market share.
  • TIAA administers programs for seven states, with a total of $36.4 billion in assets and a 9.4% market share.
  • Fidelity administers programs for six states, with $35. 6 billion in assets and a 9.2% market share.
  • Union Bank & Trust administers programs for three states, with a total of $23.7 billion in assets and a 6.1% share.

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