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Monday, December 21, 2009

Affluent households ignore 529 plans, study says

Investment News

Despite tax breaks, report says the market is under-penetrated

By Charles Paikert
June 14, 2009, 6:01 AM EST
Two-thirds of affluent parents with children under 18 aren't using Section 529 college savings plans, according to a report by The Phoenix Cos. Inc. …
“I was really surprised at the extent to which the high-net-worth segment is not using 529 plans,” said Walter Zultowski, senior vice president of research and concept development for Hartford, Conn.-based Phoenix and author of the report. “529s should be a no-brainer for them.” …
Jeff Coghan:
Jeff Coghan: "We are still early in the life cycle of this product."
“I would think that 529s would be part of financial planning for affluent parents, especially with the tax benefits,” said JoLynn Free, senior vice president and financial consultant in Austin, Texas, for RBC Wealth Management of Minneapolis. “We certainly recommend them, and as a vehicle, I've found them to be solid gold.” …
In addition to the tax benefits of 529 plans, Ms. Free said that affluent clients like the fact that parents, not children, remain owners of the account. What's more, 529 accounts appeal to high-net-worth parents and grandparents because they can easily transfer cash into a tax-protected account, she added. …
E-mail Charles Paikert at cpaikert@investmentnews.com.