The Markets February 10, 2025

2024 Sees Net Inflows of $3.1B to 529 Tuition Savings Plans

A provision of the SECURE Act 2.0 of 2022 that permits certain assets saved for education to be rolled over into retirement accounts is expected to broaden the appeal of tax-advantaged tuition savings plans in coming years.

Reported by

Remy Samuels

College savings plans, known as 529 tuition savings plans, continued to show asset growth and net flows in 2024, with these accounts reaching $3.1 billion in the fourth quarter of 2024, according to recent data from ISS Market Intelligence. A provision of the SECURE Act 2.0 of 2022 that permits certain assets saved for education to be rolled over into retirement accounts is expected to broaden the appeal of tax-advantaged tuition savings plans in coming years.

The year-end 2024 inflows represent an increase from Q4 2023 net inflows, which were $2.1 billion, and Q4 2022 net inflows of $1.5 billion.

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529 plans accumulate contributions in tax-advantaged accounts that can be invested in and used to pay for the qualified education expenses of the beneficiary. SECURE 2.0 also allows certain assets in a 529 plan maintained for at least 15 years for a designated beneficiary to be rolled over on a tax-free basis to a Roth IRA for the same beneficiary.

The increase in accumulated assets aligns with continued demand for 529 accounts and an increasing number of parents successfully using them for the intended purpose of paying qualified educational expenses, according to data collected by ISS Market Intelligence, which, like PLANSPONSOR, is owned by ISS STOXX.

Student loan debt in the U.S. totaled $1.773 trillion, as of January 15, according to the Education Data Initiative, and 529 plans provide an opportunity for families to help their children avoid student debt in the future.

ISS Market Intelligence data found that, as of December 2024, Americans had opened 16.1 million 529 accounts and invested $500 billion in assets in those savings plans. The data also showed that there are also $2.3 billion in assets invested in 195,542 Achieving a Better Life Experience accounts. ABLE accounts are tax-advantaged savings accounts that benefit people with disabilities.

“The overall outlook for 529s continue to brighten, and especially with the expansion of qualified expenses to certain types of qualified distributions from 529s to Roth IRAs,” wrote Paul Curley, director of 529 and ABLE research at ISS Market Intelligence, in the report. “As 529s broaden from a product for education financial planning to retirement financial planning in 2024 and continuing into 2025, we expect new positive energy by new stakeholders to drive growth over the next three to five years.”

The five largest 529 savings plans by Q4 2024 assets were: