After years of progress, the Ascensus Ugift program, a free service that allows contributions to a beneficiary’s account, saw usage accelerate during the past year, resulting last month in all-time contributions topping the $3 billion threshold for gifts made to education savings accounts.
Originated in 2007, gifts are now made through the READYSAVE 529 mobile app or through the Ugift 529 website run by Ascensus LLC. Upon signing up, friends and family receive a unique code they can use to make contributions to the beneficiary’s 529 or ABLE account. Gifts may be made by ACH transaction or check, with no associated fees charged to the beneficiary or the contributor. The earnings on those accounts are not subject to federal income tax when applied to qualified education expenses.
“Ascensus, through Ugift, has done a great job of making it easy for friends and families to contribute to 529 and ABLE plans,” says Andrea Feirstein, managing director of AKF Consulting Group.
According to ISS Market Intelligence, which, like PLANADVISER, is owned by Institutional Shareholder Services Inc., the historical percentage of contributions from gifts was 2.8%, but in the fourth quarter of 2022, the percentage increased to 4%.
“The 4% in 4Q 2022 is higher than the historical figure of 2.8% due to market and economic volatility and expansion of gifting functionality, awareness and platforms,” says Paul Curley, associate director of 529 & ABLE solutions at ISS Market Intelligence.
Feirstein says Ascensus’ fintech innovation can dramatically increase the contribution percentage of gifting: “Imagine if every 529 plan embraced a gifting program; that percentage—and the absolute dollars contributed—would soar,” she says.
Ugift surpassed the $3 billion benchmark in late February. In January 2022, its all-time total was at $2 billion, which means it increased by a remarkable 50% in only 13 months, according to Ascensus data.
“Ugift is clearly having a meaningful impact for individuals and families saving for some of life’s most important needs,” said Peg Creonte, president of Ascensus’ Government Savings line of business, in a statement. “Our hope to provide an easy and transparent way for friends and family to contribute to a beneficiary’s account is being realized—and that’s very gratifying for us and the state 529 and ABLE partners we support.”
Since the end of 2019, Ascensus has seen 1.5 million new accounts open. As of December 31, 2022, Ascensus served 22 ABLE plans and 43 529 education savings plans.
“[Gifting] would be even more impactful if we could expand the reach to encompass employers and contributions through the workplace,” says Feirstein. “Continued innovation across the 529 and ABLE universe will attract assets from new and expanded channels, which will go a long way toward helping families achieve their education goals for their children.”