State 529 college savings plans are a promising platform for Child Development Accounts (CDAs). They include the potential for investment growth, which is essential to building assets over time, and they may present a “quasi-default” investment during online enrollment. An alternative to immediately displaying the full list of investment options, a quasi-default can simplify account opening, streamline decision-making, and nudge savers toward a specific, diversified investment. Inclusive 529 plan innovations like quasi-defaults can benefit a large, diverse group of potential savers—well beyond those participating in CDAs.
Project: College Success
Clancy, M. M., & Beverly, S. G. (2017, November). 529 plan investment growth and a quasi-default investment for Child Development Accounts (CSD Policy Brief No. 17-42). St. Louis, MO: Washington University, Center for Social Development. https://doi.org/10.7936/K7F76C1Z