A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code. Investment options often include stock mutual funds, bond mutual funds, and money market funds, as well as, age-based portfolios that automatically shift toward more conservative investments as the beneficiary gets closer to college age.
Historically, many new 529 accounts were set up with the mailing of a physical application to the 529 program. This labor-intensive, paper-based process does not meet current industry standards for automated account set-up and trade settlement. Most accounts are held off-book, resulting in greater operational overhead and unrealized improvements in client service.
Since 2010, NSCC Fund/SERV® and Networking systems have supported the automation of 529 account processing.