[16554]
September 17, 2003
TO: PENSION COMMITTEE No. 34-03
PENSION OPERATIONS ADVISORY COMMITTEE No. 59-03
RESEARCH COMMITTEE No. 19-03
529 PLAN ADVISORY COMMITTEE No. 53-03
RE: INSTITUTE RELEASES AD HOC SURVEY OF COVERDELL ESAS AS OF JUNE 30, 2003
The Institute recently surveyed certain of its members in a continuing effort to track
developments in the education savings market. The Institute’s survey requested Coverdell
Education Savings Account (ESA)1 data on the number of beneficiaries, average number of
funds held per beneficiary, and value of the assets as of December 31, 2002 and June 30, 2003.2
This ad hoc survey was conducted in response to ongoing interest in the education savings
market.3
Survey respondents indicate that between December 31, 2002 and June 30, 2003, the
number of beneficiaries with Coverdell ESAs rose 1 percent, after increasing 15 percent in 2002.
Survey respondents indicated that Coverdell ESA assets invested in mutual funds increased 34
percent over the first half of 2003, boosted in part by favorable investment returns.4 Survey
respondents managed assets for about 786,400 ESA beneficiaries at the end of June 2003. As of
the end of June 2003, the average ESA beneficiary held $1,400 in mutual fund assets in 1.4 funds.
1 In July 2001, Education IRAs were renamed Coverdell ESAs. In addition, as allowed by the Economic Growth and
Tax Relief Reconciliation Act (EGTRRA) of 2001, the annual contribution limit to these accounts was $2,000 in 2002
and is $2,000 in 2003 (up from $500 previously).
2 The Institute has conducted two earlier ad hoc surveys containing questions on Coverdell ESAs or Education IRAs:
(1) a Coverdell ESA survey for the same sample as the current survey, for June 2002, summarized in Institute
Memorandum [#15230], dated October 3, 2002, and (2) a much earlier survey (containing a different number and
composition of respondents) on Roth IRAs, Education IRAs and SIMPLE IRAs for first quarter 1998, summarized in
Institute Memorandum [#10214], dated August 20, 1998.
3 For recent data on the 529 plan market, see the College Savings Plans Network data for June 2003 (distributed in
Institute Memorandum [#16546], dated September 16, 2003).
4 At year-end 2002, domestic equity funds accounted for 75 percent of Coverdell ESA mutual fund assets, foreign
equity funds for 6 percent, hybrid funds for 6 percent, bond funds for 8 percent, and money market funds for 5
percent (see “Mutual Fund Assets in Retirement Accounts: Results from ICI’s Annual Survey of Retirement
Statistics” available at: http://members.ici.org/getMemoPDF.do?file=aret02).
2
Coverdell ESA Survey Results:
Number of Coverdell ESA Beneficiaries
673,300
753,000
776,800
786,400
December 2001 June 2002 December 2002 June 2003
Source: Investment Company Institute, Coverdell ESA surveys of an ad hoc sample of member firms.
These ad hoc survey results are based on the responses of 21 firms, representing an
estimated 40 percent of the $2 billion of Coverdell ESA assets invested in mutual funds at year-
end 2002.5 Note that the survey respondents are not randomly selected and therefore do not
necessarily reflect the characteristics of the typical Coverdell ESA invested in mutual funds.
If you have any questions or comments concerning the survey, please call me at (202)
326-5915.
Sarah Holden
Senior Economist
5 For data on retirement (and Coverdell ESA) assets invested in mutual funds, see the Investment Company Institute,
“Mutual Funds and the U.S. Retirement Market in 2002,” Fundamentals, Vol. 12, No. 1, June 2003 (available at:
http://www.ici.org/stats/res/fm-v12n1.pdf ).