Best 529 College Savings Accounts
Happy 529! (Got it? Because it’s May 29th?)
Okay, yes, it’s not really Christmas, but it’s a good reminder to use Account 529 if you or your child (or friend, or your loved one’s child ) is planning on going to college. The benefits to accounts are numerous: you use after tax dollars to fund them, which then rise tax-free and can be withdrawn tax-free if you use payments for qualified education expenses such as tuition, books, etc. Some states also offer additional tax breaks.
States offer their own plans with a variety of investment options and fees, but you’re not limited to what your state has to offer. For example, you could live in Florida but open an account with the my529 Utah plan.
With that in mind, Morningstar tracks the top 529 accounts available. The ranking is based primarily on commissions, flexibility and investment opportunities. One thing to consider, as Karen Wallace writes, is the state’s tax breaks, even if the plan doesn’t meet other requirements. “Morningstar researchers have calculated that the state ‘s 5 percent tax credit is a generous enough incentive to … offset less attractive investment options and high fees.”
Otherwise, here are the best options this year:
- Utah my529 plan – This plan has low fees, good investment opportunities, flexibility, and a great tax incentive for state residents.
- Virginia Invest529 Plan – Virginia offers well diversified age portfolios at a low cost.
- Nevada Vanguard 529 College Savings Plan – At Morningstar, “Age Plan options still charge a fee that is below average compared to direct selling plans that invest in passive funds.”
- Illinois Direct Selling College Bright Start Program
Check out a more detailed analysis of your (or other) state’s planhere .
Best 529 Plans | morning Star