Making plans for the next generation often involve planning for their education. And with educational costs rising, many families are using 529 education savings plans to help thwart the future expense of college tuition, boarding, books, and the like.
As a result, it is no surprise that recent analysis by Morningstar Inc. found a sharp increase in contributions to Section 529 plans in 2012. Reuters reported on these findings in an article titled “Morningstar: 529 college savings plans up in 2012 despite some lags.” The article notes a 529 plan is a tax-advantaged account that encourages savings now toward exorbitant college costs later. That said, not all plans are alike and the study found some were far better than others, and some were even of questionable worth.
The final analysis: although 529 education savings plans as a whole underperformed against some mutual funds, 2012 saw a 25% rise in 529 plan assets against a 13.4% gain in the S&P index.
Reference: Reuters (April 22, 2013) “Morningstar: 529 college savings plans up in 2012 despite some lags”