529 college savings plans continue to increase in popularity, as assets in the plans grew to an estimated $45.1 billion at the end of the third quarter, according to data released by the nonprofit College Savings Foundation.
Plan assets were up 5 percent from $43 billion at the end of the second quarter, and up 55 percent from $29.1 billion in the third quarter of 2003.
The plans, which are offered on a state-by-state basis, give federal income tax-free treatment to account earnings and distributions used for qualified education expenses. The federal tax-free treatment of distributions from Section 529 college savings plans currently is set to expire in 2010.
According to Financial Research Corp., which developed the data, estimated net new contributions to 529 savings plans in the third quarter were $2.2 billion, compared with $2.9 billion in the second quarter and $2.9 billion in the third quarter of 2003. For the first three quarters of 2004, net sales totaled $9.2 billion, up 21 percent over net sales of $7.6 billion during the first three quarters of 2003.
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