A recent SavingForCollege.com article uses Ascensus data to show that average age of 529 plan account owners when they open a 529 plan. The best time to start saving is usually between the ages of 25 and 34, as it’s advised that you should open a plan as soon as you have someone to save for. The average person on our platform opens a 529 account at 44 years old and the majority of people waited until they were at least 35. Parents who start saving when their child is a newborn can accumulate around a third of their goal from earnings by the time their child is college age, while parents that wait until high school will have to contribute six times as much per month and only 10% of their goal will come from earnings. Saving early has more of an impact than saving more.
529 account
Total Education Savings Gifted to 529 Beneficiaries Reaches New Milestone
Dresher, PA—Ascensus—whose technology and expertise help millions of people save for retirement, education, and healthcare—is pleased to announce that more than $1 billion has been gifted to 529 education savings accounts through Ascensus’ Ugift®. Since reaching $500 million in December of 2017, 529 gifting contributions have increased significantly with nearly $270 million gifted in 2019 alone.
Launched in 2007, Ugift is an easy, free-to-use service that lets 529 account owners encourage family and friends to give the gift of education savings in lieu of traditional gifts. Contributions can be made directly and securely at any time, and gift givers can make a one-time gift or even schedule recurring gifts for multiple beneficiaries. Ascensus also offers the Ugift program to individuals living with disabilities as a benefit of their ABLE savings accounts.
“Ugift was designed to help savers crowdsource their education savings goals through a single, secure platform. As the program continued to grow, we decided to offer an enhanced experience, making it even easier for loved ones to track and schedule regular gifts,” states Kevin Cox, head of Ascensus’ Government Savings division. “These new features were immediately embraced by both account owners and family and friends looking to give the gift of savings, contributing to this exciting milestone of more than $1 billion gifted.”
Ascensus’ data also suggests that Ugift experiences a major spike in utilization over the holiday season. In fact, 26% of all dollars gifted in 2019 were contributed in the months of November and December.
“As the year came to a close, we were excited to see holiday gifting contributions reach record highs as more people recognized the importance of giving the gift of education savings,” concludes Cox.
Ascensus continues to invest in Ugift, and is currently piloting additional crowd funding capabilities for this savings aid.
For more information on Ugift, visit Ugift529.com or UgiftABLE.com.
About Ascensus
Ascensus is the largest independent recordkeeping services provider, third-party administrator, and government savings facilitator in the United States. The firm delivers technology and expertise to help millions of people save for what matters—retirement, education, and healthcare. For more information about Ascensus, visit ascensus.com. Explore the firm’s latest data and insights on savings behaviors at pulse.ascensus.com and view career opportunities at careers.ascensus.com.
Before investing in any 529 plan, please consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s 529 plan.
When you invest in a 529 plan, you are purchasing municipal securities whose value may vary based on market conditions. Investment returns are not guaranteed, and you could lose money by investing in a 529 plan. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.
The availability of tax advantages or other benefits may be contingent on meeting other requirements. Please consult your financial, tax, or other advisors to learn more about how state-based benefits and limitations would apply to your specific circumstance. You may also contact your home state’s 529 plan(s), or any other 529 plan, to learn more about those plans’ features, benefits and limitations.
Ugift® is a registered service mark of Ascensus Broker Dealer Services, LLC.
For the past three years, Congress has attempted to pass major retirement reform legislation. It has finally succeeded with the year-end passage of two spending packages meant to avert a government shutdown. One of the packages, the Further Consolidated Appropriations Act, 2020 (FCAA), includes multiple bills—including the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which contains several major retirement-related provisions. These provisions are nearly identical to those included in an earlier version of the SECURE Act that was passed by the U.S. House of Representatives in May 2019. At the time of this publication, the President had not yet signed these bills into law. But it is widely anticipated that he will.
The SECURE Act provides the most comprehensive retirement reform package in over a decade. The primary goals of the SECURE Act are to expand retirement savings, improve plan administration, simplify existing rules, and preserve retirement income. The provisions summarized below will certainly give rise to questions in the coming days. Our aim is to provide an easy reference to the important retirement plan changes, while understanding that more federal guidance will be needed to resolve certain matters.
The FCAA also includes bills that provide disaster relief (discussed later) and new health and welfare provisions. The most significant health and welfare measure repeals the controversial “Cadillac Tax.” The Affordable Care Act had created a 40 percent excise tax on the most expensive employer-sponsored health insurance plans when benefits exceeded a certain threshold. This tax was supposed to become effective in 2018, but was previously delayed until 2022.
New Incentives to Establish or Enhance Employer Plans
The following SECURE Act provisions create new incentives and modify existing incentives for employers to establish retirement plans. They also broaden the time frame for employers to establish plans.
- Multiple employer plans (MEPs). Employers can more easily participate in a MEP or a new variant, a “pooled employer plan,” or PEP. Both have basic features in common, the latter to be administered by a pooled plan provider. (Effective for 2021 and later plan years.)
- Multiple participating businesses with a common interest would generally be part of a MEP.
- Multiple participating businesses with no common interest other than plan sponsorship would generally be part of a PEP.
- Smaller MEPs and PEPs may be able to file a simplified short Form 5500-SF tax return for the plan.
- Noncompliance by one participating employer will not disqualify the entire MEP/PEP arrangement, thus eliminating the “one bad apple” rule.
- Deadline to establish a plan. Employers may establish a qualified plan—such as a profit sharing or pension plan—as late as their business tax filing deadline, including extensions. (Under previous rules, employers had until the last day of their business year.) This extension will not apply to certain plan provisions, such as elective deferrals. (Effective for 2020 and later taxable years.)
- Small employer plan startup credit. The small employer retirement plan startup tax credit increases from $500 to a maximum of $5,000 per year, available to cover startup costs for the first three years that the plan is in effect. (Effective for 2020 and later taxable years.)
- Automatic enrollment credit. The SECURE Act provides a new tax credit to employers that include an automatic enrollment feature in their new or existing small 401(k) plans (100 or fewer employees) or SIMPLE IRA plans. The maximum annual tax credit is $500 for each of the first three years that the plan is maintained. (Effective for 2020 and later taxable years.)
- Election of 401(k) nonelective safe harbor design. Employers that make nonelective safe harbor plan contributions (versus a matching contribution) get two benefits: 1) they now escape the notice requirement, and 2) they have more time to amend their plans to implement this nonelective 401(k) safe harbor plan feature. Specifically, they may amend up to 30 days before the end of a plan year if they make a three percent contribution. But they may generally amend by the close of the following plan year if the plan is also amended to require a four percent nonelective safe harbor contribution. (Effective for 2020 and later plan years.)
- Annuity selection safe harbor. The SECURE Act creates a new safe harbor for a plan fiduciary to meet ERISA’s “prudent man rule” when selecting an insurer and an annuity contract in order to offer lifetime income options under a plan. (Effective on date of enactment.)
New Ways to Save More in Employer Plans
The next set of provisions lets employers automatically increase employees’ deferral contributions to a higher percentage, requires employers to give participants a future benefits projection, and promotes plan entry for certain part-time employees.
- Higher cap on deferrals in safe harbor 401(k) plans. Some 401(k) plans meet nondiscrimination requirements through automatic enrollment and automatic deferral increases. These qualified automatic contribution arrangements (QACAs) will now have a maximum 15 percent deferral rate instead of 10 percent. (Effective for 2020 and later plan years.)
- Lifetime income disclosure. Defined contribution plans must provide, at least annually, a projected lifetime income stream that a participant’s accrued benefit could generate. This disclosure does not create employer liability for the amounts projected. (Effective for benefit statements provided more than 12 months after the DOL issues guidance, including the interest assumptions to be used and a model disclosure. The bill prescribes that this guidance be completed within one year of the date of enactment.)
- Participation by less than full-time employees. Employees who have three consecutive 12-month periods of 500 hours of service and who satisfy the plan’s minimum age requirement must be allowed to make elective deferrals in an employer’s 401(k) plan. The current, more restrictive, eligibility rules could continue to be applied to other contribution sources (e.g., matching contributions) and to ADP/ACP safe harbor plans. Employers may also exclude such part-time employees from coverage, nondiscrimination, and top-heavy test rules. (Effective for 2021 and later plan years, but no 12-month period that begins before January 1, 2021, shall be taken into account.)
More Targeted Provisions Affecting Employer Plans
The SECURE Act contains a number of additional, more targeted provisions that apply to employer plans.
- Custodial accounts of terminating 403(b) plans. Plan administrators or custodians of a 403(b) custodial account may distribute the account “in kind” to a participant or beneficiary when the employer is terminating the 403(b) plan. (Retroactive; effective for 2009 and later taxable years.)
- Lifetime income portability. Participants in a qualified plan, 403(b) plan, or governmental 457(b) plan may roll over lifetime income investments to an IRA or another retirement plan without a traditional distribution triggering event if their plan no longer permits such investments. (Effective for 2020 and later plan years.)
- Higher penalties for plan reporting failures. Retirement plan information reporting failures will result in the following increased penalties. (Effective for filings and notices required January 1, 2020, and thereafter.)
- Form 5500, $250 per day, up to a maximum of $150,000
- Form 8955-SSA (deferred benefit reporting), $10 per day, up to a maximum of $50,000 for failing to file, $10 per day, up to a maximum of $10,000 for failing to file a notification of change
- Withholding notices, $100 per failure, up to a maximum of $50,000 for all such failures during any calendar year
- Credit card loan prohibition. Retirement plan loans enabled through a credit card (or a similar program) will be treated as distributed from the plan and subject to taxation. (Applies to loans made after the date of enactment.)
- Shared Form 5500 filing. Employers sponsoring defined contribution plans that have the same trustee, administrator, fiduciaries, plan year, and investment options may file a common Form 5500. (Effective for 2022 and later plan years.)
- Nondiscrimination relief for closed pension plans. Defined benefit pension plans that are closed to new participants will get nondiscrimination relief that protects benefits for older, longer serving participants. (Effective upon enactment, or—if elected—for 2014 and later plan years).
- Community newspaper pension funding relief. Sponsors of certain plans maintained for community newspapers may calculate defined benefit plan contributions with interest rates and amortization periods that reduce funding requirements. (Effective for plan years ending after December 31, 2017.)
- Church retirement plan rules. New rules clarify which employees may participate in retirement plans sponsored by church-controlled organizations. (Effective for past, present, and future plan years.)
- Pension plans of cooperatives and charities. Certain cooperatives and charities may reduce their Pension Benefit Guaranty Corporation (PBGC) insurance premiums for defined benefit plans. (Effective for 2019 and later plan years).
- Lower minimum age for in-service distributions. This provision is not part of the SECURE Act, but is found in Division M—the Bipartisan American Miners Act, which is part of FCAA. This provision allows in-service distributions at age 59½ (instead of age 62 under current law) to participants in governmental 457(b) plans and certain pension plans. (Effective for 2020 and later plan years.)
New Provisions Affecting Employer Plans and IRAs
The following SECURE Act provisions affect both employer plans and IRAs.
- More rapid payouts to nonspouse (and other) beneficiaries. Most nonspouse beneficiaries of IRAs, qualified defined contribution plans, 403(b) plans, and governmental 457(b) plans will generally be required to distribute inherited amounts within 10 years. (Effective for plan participant/IRA owner deaths in 2020 or later years; 2022 or later years for governmental plans; special delay to accommodate contracts of certain collectively bargained plans.) Exceptions include those who, at the time of the account owner’s death, are
- disabled individuals,
- certain chronically ill individuals,
- beneficiaries whose age is within 10 years of the decedent’s age,
- minors (they would begin a 10-year payout period upon reaching the age of majority), and
- recipients of certain annuitized payments begun before enactment of the SECURE Act.
- Delayed age for beginning RMDs. The age when required minimum distributions (RMDs) from Traditional IRAs, qualified plans, 403(b) plans, and governmental 457(b) plans must generally begin is increased from age 70½ to age 72. (Effective for distributions required in 2020 and later years, for those who reach age 70½ in 2020 or a later year.)
- Birth/adoption excise tax exception. The birth of a child or adoption of a child (or individual who is incapable of self-support) qualifies both as a plan distribution event and as an amount that is exempt from the 10 percent early distribution penalty tax (if applicable) for distributions of up to $5,000 in aggregate from IRAs and defined contribution qualified plans, 403(b) plans, and governmental 457(b) plans. These amounts may be repaid. (Effective for distributions in 2020 and later years.)
- “Difficulty of care” payments treated as eligible compensation for retirement plan funding. Because many home healthcare workers receive payment that is not taxable income, they haven’t been able to contribute to a retirement plan. Now such “difficulty of care” payments will qualify as eligible compensation for IRA and other plan contributions. (Effective upon enactment for IRAs, and for 2016 and later plans years for employer plans.)
More Flexibility for IRA Contributions
The following provisions specifically affect IRAs.
- Traditional IRA contributions at any age. Taxpayers with earned income can make Traditional IRA contributions at any age, not just for years before reaching age 70½, as under current law. (Effective for 2020 and later taxable years.)
- Graduate student IRA contributions. Certain stipend, fellowship, and similar payments to graduate and postdoctoral students will be treated as earned income for IRA contribution purposes. (Effective for 2020 and later taxable years.)
New Eligible Expenses for 529 Plans
The SECURE Act also broadens the definition of eligible expenses for qualified tuition or “529” plans. Individuals may now take a qualified, tax-free 529 plan distribution to pay for registered apprenticeships. They may also distribute up to $10,000 in order to make repayments of student loans for a 529 plan beneficiary—or a beneficiary’s sibling. (Effective for distributions in 2019 and later years.)
Disaster Relief Provisions
To provide relief for certain natural disasters that occurred during the last couple of years, the FCAA contains a bill entitled the Taxpayer Certainty and Disaster Tax Relief Act of 2019. Among other things, this bill provides disaster relief to individuals in presidentially declared disaster areas who have taken IRA and retirement plan distributions between January 1, 2018, and 180 days after enactment of this legislation. (Applicable to plans that are amended on or before the last day of the first plan year beginning on or after January 1, 2020, or later, if the IRS allows.)
- Qualified disaster distributions. Qualifying distributions of up to $100,000 from employer-sponsored retirement plans and IRAs are exempt from the 10 percent early distribution penalty tax and the normal withholding requirements. Individuals affected by more than one disaster may distribute up to $100,000 per disaster.
- Repayment options. Individuals may repay qualifying distributions within a three-year period. Distributions not repaid generally will be taxed ratably over a three-year period, unless individuals elect otherwise. Individuals may also repay distributions taken for cancelled home purchases.
- Relaxed loan requirements. Employers may allow participants to request a plan loan of up to $100,000. Participants may delay loan repayments for up to one year.
Effective Dates and Amendment Deadlines
Some effective dates are mere days away—January 1, 2020. These dates were retained from the May 2019 version of the legislation. But the final version of FCAA contains delayed amendment deadlines for employer-sponsored retirement plans. This will allow employers to implement changes immediately, while generally having until the end of their 2022 plan year (2024 for governmental and collectively-bargained plans) to amend for the changes.
As with any major piece of legislation, questions will arise as provisions are analyzed. We expect the IRS and Department of Labor to address these concerns in the coming months. Ascensus will continue to assess the effect of this legislation and any related guidance. Visit Ascensus.com for future updates.
Click here for a printable version of this edition of the Washington Pulse.
Published in the Federal Register are IRS proposed regulations that reflect statutory changes to Achieving a Better Life Experience (ABLE) savings accounts. ABLE programs are established by states to allow tax-advantaged saving for certain qualified expenses of special needs individuals.
Contributions by Special Needs Beneficiaries
Prior to enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), aggregate annual contributions to an ABLE beneficiary’s account by all contributors could not exceed the federal gift tax exclusion (currently $15,000). A provision of TCJA allows additional contributions above this limit if they are made by the special needs beneficiary of the account when based on his or her own employment.
This additional contribution for a year is limited to the lesser of
- income earned by the special needs beneficiary or
- the federal poverty level for a one-person household (currently $12,490).
Additional Contribution Considerations
- Determination of eligibility to make such contributions rests with the designated beneficiary or a person acting on his or her behalf.
- Excess contributions and their earnings are to be removed from an ABLE account by the methodology used to correct IRA excess contributions.
Rollovers from 529 Plans to ABLE Accounts
A second TCJA statutory change reflected in this guidance is the ability to roll over amounts from a 529 plan (tax-advantaged education savings) account to an ABLE account. This rollover must meet the following conditions.
- The rollover must originate in the 529 plan account of the special needs beneficiary or another family member.
- The rollover amount, when added to other contributions to the account for the year (not including contributions by the special needs beneficiary), cannot exceed the annual federal gift tax exclusion ($15,000).
Both the special needs beneficiary contribution and 529 plan rollover provisions of the TCJA were previously addressed with interim guidance published in IRS Notice 2018-62.
Change in Residency Requirements
In addition to addressing these TCJA changes, these new proposed regulations state that current proposed ABLE regulations will—when finalized—reflect a 2015 statutory change found in the Protecting Americans from Tax Hikes (PATH) Act. That legislation removed a residency requirement that limited state ABLE programs to establishing accounts only for special needs beneficiaries who resided in that state, or in a “contracting state” (a multi-state program).
Comments and Applicability Date
Comments on these proposed regulations will be accepted for a period of 90 days from their publication in the Federal Register (October 10, 2019).
This guidance is described as being applicable for “taxable years beginning after date of publication.”
I’ll never forget the first cold dash of reality around the challenges of saving for college. Newly returned to work from my maternity leave after the birth of my first son, I was welcomed back by a senior executive who said to me, “You know you’ll have to start saving $800 a month right now if you want to send him to a private college, right?” If I wasn’t feeling worried enough about the challenges of parenting, well, that did it.
Needless to say, we didn’t start saving $800 a month…but we did start saving. A little at a time as we adjusted to the expenses of childrearing, and more as he and his brother and sister grew and the day care bills disappeared.
And as it turns out, that’s how most people save.
At Ascensus, we administer over 4 million 529 accounts, providing us with a very good view on how families use 529s to save for college. Unsurprisingly, the vast majority are NOT starting an $800 automatic monthly contribution upon the birth of a child! Here’s what they are doing:
On average, 529 savers are:
- Opening an account with a lump sum of about $3,800. Most 529 plans allow accounts to be opened with small contributions of $25 or even less, but in general it looks like account owners are saving up in another vehicle or receiving a large gift and then investing in a 529.
- Contributing a little at a time, over a long period of time. Ascensus processes millions of 529 contributions each year; about 60% of those contributions are $100 or less. Only a small percentage are greater than $500.
- Saving enough to fund about 43% of an in-state, public university. Accounts that grow to cover the cost of an average private university are few and far between.
- Increasingly using gifting tools to help them save. Across our 529 plans – Ascensus expects to process over $250 million in 529 gifts in 2019 through our Ugift platform.
The benefits of starting early
Nearly half of Ascensus-administered accounts were opened when the beneficiary was 5 or younger. The good news for those account owners is that this advanced planning can potentially get them much closer to their savings goals. When we look at accounts with beneficiaries age 16-17, those accounts that have been open at least 11 years have an average balance of over $44,000. Accounts opened 5 years or less for this same age group have accumulated significantly less, on average, about $26,000.
That first son just graduated from college – on the same day that his brother graduated from college 500 miles away! Thanks to their 529s, we were able to help them meet their education goals. It certainly wasn’t the straight-line formula that was laid out to me 22 years ago, but then what aspect of parenting conforms to a straight-line formula?
Total Withdrawals for College-Age Beneficiaries Could Cover Full Annual Tuition Costs for 118,000+ Students
Dresher, PA—Ascensus—whose technology and expertise help millions of people save for retirement, education, and healthcare—has released data from its 529 platform during the 2019 “back to school” and tuition payment season that highlights the volume of education savings that parents and grandparents have tapped into to help fund beneficiaries’ education. From June 1 through August 31, 2019, 529 account owners made more than 491,000 withdrawals totaling more than $3.25 billion in assets.
Ascensus currently administers 529 plans across 20 states and the District of Columbia and has been ranked the #1 529 program manager in the nation for assets under management.[1] This data offers a comprehensive view into how savers across various demographics in the U.S. are leveraging their 529 savings to finance rising education expenses.
For 529 accounts with beneficiaries ages 17 and over, who are approaching or at college or trade school level:
- 454,000+ qualified withdrawals
- More than $3 billion in total savings withdrawn, which could cover the full annual tuition costs for a public four-year out-of-state college for 118,491 students2
- $8,980 average withdrawal per beneficiary, which could cover 88% of the annual tuition cost of a public four-year in-state college[2]
For 529 accounts with beneficiaries ages 16 and under, who are receiving their primary education:
- 37,000+ qualified withdrawals
- More than $130 million in total savings withdrawn, which could cover the full tuition costs of 12,218 K-12 private school students3
- $4,487 average withdrawal per beneficiary, which could cover about 42% of the national average annual cost of private primary school tuition[3]
“We’re thrilled to see hundreds of thousands of 529 account owners tapping into the funds they’ve worked so hard to save,” states Kevin Cox, head of Ascensus’ government savings division. “We recognize that it’s often difficult for American families to prioritize savings, and nothing makes us happier than to see so many Americans providing the gift of education with the savings they’ve accumulated in a 529.”
About Ascensus
Ascensus is the largest independent recordkeeping services provider, third-party administrator, and government savings facilitator in the United States. The firm delivers technology and expertise to help millions of people save for what matters most—retirement, education, and healthcare. For more information about Ascensus, visit ascensus.com. Explore the firm’s latest data and insights on savings behaviors at pulse.ascensus.com and view career opportunities at careers.ascensus.com.
Before investing in any 529 plan, please consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s 529 plan.
When you invest in a 529 plan, you are purchasing municipal securities whose value may vary based on market conditions. Investment returns are not guaranteed, and you could lose money by investing in a 529 plan. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.
The availability of tax advantages or other benefits may be contingent on meeting other requirements. Please consult your financial, tax, or other advisors to learn more about how state-based benefits and limitations would apply to your specific circumstance. You may also contact your home state’s 529 plan(s), or any other 529 plan, to learn more about those plans’ features, benefits and limitations.
[1]529 College Savings Quarterly Data Update: Q2 2019, August 2019, Strategic Insight.
[2]Trends in College Pricing 2018, The College Board, October 2018.
[3]Average Private School Tuition Cost, 2019-20, Private School Review, https://www.privateschoolreview.com/tuition-stats/private-school-cost-by-state
A recent SavingForCollege.com article features data from the Ascensus 529 platform and highlights the importance of starting to invest early for beneficiaries’ future education. It notes that as of year-end 2018, over half of all Ascensus 529 accounts were opened when the beneficiary was five years old or younger and 38% were opened when the beneficiary was two years old or younger. With increasingly high costs for college and private school, families that make a savings plan while their children are still very young can prevent financial panic down the road.
TIAA recently announced its selection of Ascensus as recordkeeper of choice for its $28 billion 529 education savings accounts business. TIAA’s 529 assets will be converted from the previous recordkeeper, DST. TIAA is currently the third-largest 529 program manager in the country, with plans in seven states, representing about 1.3 million accounts. This represents an exciting milestone for Ascensus’ Government Savings business line, as we continue to build our reputation as the 529 market leader and #1 529 program manager for assets under management.
“After a careful review of several providers based on broad criteria, the highest scoring bidder across all criteria was Ascensus,” TIAA-Cref Tuition Financing president Christopher Lynch said in a statement. “Ascensus demonstrated that they can deliver a superior customer experience now and have the ability to maintain that superior customer experience going forward.”
In a recent Savingforcollege.com article, Peg Creonte, SVP of business development for Ascensus Government Savings, discusses the ways in which beneficiaries can maximize college savings through gifting tools. Crowdfunding through programs such as Ascensus’ Ugift, the largest 529 plan gifting platform, has become increasingly popular among families saving for education. When asking for 529 plan gifts, Creonte suggests discussing 529 plan gifting opportunities with friends and family during a non-gift-giving season: “We’ve found that disconnecting the ask from the event can get people more comfortable.”
Principal Enters 529 Investment Space in Partnership with Ascensus, the Nation’s Leading 529 Program Manager, to Offer Savers Solutions to Meet Their Education Goals
Santa Fe, New Mexico—After a competitive Request for Proposals process, The Education Trust Board of New Mexico has selected Ascensus and Principal as managers for The Education Plan® and the Scholar’s Edge® 529 plans. This marks the entrance of Principal into the 529 savings account market.
Ascensus, whose technology and expertise helps millions of people save for retirement, education, and healthcare, will provide program management, recordkeeping, administrative services, and investment oversight for The Education Plan.
Principal Global Investors, which leads asset management at Principal, will provide all aspects of investment management services for the Scholar’s Edge plan. Principal Funds Distributor will provide marketing and distribution services for the Scholar’s Edge plan, highlighting the new investment capabilities. Principal will leverage its robust retirement and investment expertise to support participants in achieving their educational savings goals.
“The New Mexico Education Trust Board selected Ascensus and Principal as partners not only because of their compelling proposal but also because it believed that these firms share the Board’s vision that higher education improves the lives of our children and ultimately benefits the citizens and the economy of New Mexico,” said Sandy Liggett, chairwoman.
“All of us at Ascensus are thrilled to have been selected to support the State of New Mexico and its 529 plan savers,” said David Musto, president of Ascensus. “We welcome the opportunity to partner with our colleagues at Principal to deliver best-in-class user and service experiences that can help the program’s participants—along with their families and beneficiaries—achieve their educational savings goals.”
“We understand that funding education can weigh on the minds of many, so we are pleased to be selected by the State of New Mexico to work with Ascensus and support 529 plan participants through this critical planning milestone,” said Dan Houston, chairman, president, and chief executive officer, Principal. “Our mission is to help investors save enough, have enough, and protect enough throughout their life, so it is a natural fit for us to be able to help individuals with yet another life goal: education. Our extensive retirement and asset allocation foundation will allow us the ability to assist families and individuals in achieving their financial educational goals regardless of their timeline.”
About the New Mexico Education Trust Board
The Board administers New Mexico’s 529 college savings program. The program consists of two plans. The Education Plan is sold directly to investors. Scholar’s Edge is sold through financial advisors. The combined program has 125,000 accounts and nearly $2.4 billion in assets.
About Ascensus
Ascensus is the largest independent recordkeeping services provider, third-party administrator, and government savings facilitator in the United States. The firm delivers technology and expertise to help millions of people save for what matters most—retirement, education, and healthcare. For more information about Ascensus, visit ascensus.com. View career opportunities at careers.ascensus.com.
About Principal Global Investors®
Principal Global Investors® leads global asset management at Principal®. As a multi-boutique firm, we bring a focused perspective and offer expertise across a host of asset classes.
At our core, we are driven by our purpose to help investors and businesses achieve their financial goals. Our global investment professionals deliver investment solutions for public and private pension funds, foundations and endowments, central banks, insurance companies, sub-advisory arrangements, sovereign wealth funds and individual portfolios.
Principal Global Investors manages approximately $442.4 billion in assets on behalf of over 800 institutional clients located in over 80 countries as well as retirement plans and individual clients, reflecting our worldwide market reach and experience and our commitment to high-quality research and service (as of March 31, 2019).
To find out more, visit us at principalglobal.com or principalfunds.com.