Fido Study: Pension Law Could Boost 529 Adoption
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Tuesday, October 3, 2006

Fido Study: Pension Law Could Boost 529 Adoption

The Pension Protection Act, signed into law by President Bush on August 17, could trigger a considerable rise in the adoption of 529s. A new poll by Fidelity Investments showed that more than 54 percent of parents with children age 10 or younger are now more likely to open a 529 account because of the legislation, which makes permanent the ability of 529 account holders to take federal income tax-free distributions for qualified education expenses. That benefit was previously set to expire in 2010.

As for those who already have 529s, 36 percent indicated an interest to increase the amount they contribute.

Currently, 529s lag behind bank savings accounts and U.S. savings bonds as the investment vehicles of choice for college savings. The poll found that less than one-quarter of parents surveyed have opened a 529 plan.

Boston-based Fidelity polled 1,032 parents with children 10 years or younger.

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