Q1 2022 529 plan rankings: Ten-year performance
| Rank | State | Plan | Performance Score | Performance Score |
| 1 | West Virginia | SMART529 WV Direct College Savings Plan | 41.29 | |
| 2 | South Carolina | Future Scholar 529 College Savings Plan ... | 45.00 | enroll now |
| 3 | New York | New York's 529 College Savings Program - ... | 46.32 | enroll now |
| 4 | Kansas | Learning Quest 529 Education Savings Pro ... | 49.07 |
| Rank | State | Plan |
|---|---|---|
| 1 | South Dakota | CollegeAccess 529 (Direct-sold) |
| 2 | West Virginia | SMART529 WV Direct College Savings Plan |
| 3 | Wisconsin | Edvest |
| 4 | Georgia | Path2College 529 Plan |
What is 529 plan and which ones are the best?
Best for Low Fees : ScholarShare 529 College Savings Plan
- No state residency requirements
- Silver analyst rating from Morningstar
- Low annual asset-based fees ranging from 0.06% to 0.51%
- Maximum contribution limit of $529,000
Are 529 plans still a good idea?
However, there are still benefits to investing in a 529 plan even if the beneficiary is in middle school or high school. Saving $300 per month in a 529 plan over the next 4 years would add up to over $15,000 in college savings, assuming the funds were invested in a conservative portfolio with a 2% annual investment return.
What everyone should know about 529 plans?
15 Facts All Parents Should Know About 529 Plans
- The earlier you start, the better. As with all college saving, getting started early on a 529 can pay off big time. ...
- Anyone can contribute. Grandparents, aunts, uncles, and friends often want to help out with college expenses, frequently in the form of savings bonds.
- States may match funds. ...
- Contributions are nearly limitless. ...
- Watch out for fees. ...
How to set up a 529 plan?
How to open a 529 plan in California
- Choose a 529 plan. California has only one 529 plan, called ScholarShare. ...
- Determine the type of 529 plan account. There are two main types of 529 plan accounts: individual accounts and custodial accounts. ...
- Complete the 529 plan application. ...
- Fund the 529 plan. ...
- Choose investments for the 529 plan. ...
Which 529 plan is best performance?
Q1 2022 529 plan rankings: Ten-year performanceRankStatePlan1West VirginiaSMART529 WV Direct College Savings Plan2South CarolinaFuture Scholar 529 College Savings Plan (Direct-sold)3New YorkNew York's 529 College Savings Program -- Direct Plan4KansasLearning Quest 529 Education Savings Program (Direct-sold)52 more rows•Jun 7, 2022
Which states have best 529 plans?
Best 529 Plans Of 2022The Best Overall 529 Plans.New York's 529 College Savings Program - Direct Plan.U.Fund College Investing Plan (Massachusetts)UNIQUE College Investing Plan (New Hampshire)Bright Start Direct-Sold College Savings Program (Illinois)Ohio's 529 Plan, CollegeAdvantage - Direct Plan.More items...•
Which portfolio is best for 529?
Best 529 plan investments for beneficiaries in high school Consider lowering your equity allocation to 20% or 30% and investing the remaining 70% to 80% in fixed-income portfolios consisting of bonds, CDs or money market funds.
What is the best way to invest in 529 plans?
As mentioned, you can start a 529 plan either through an advisor or, less expensively, by investing directly with the plan's sponsor. While states administer 529 plans, they typically turn over the day-to-day operations to major financial services companies, such as Fidelity, T. Rowe Price, or Vanguard.
Is Fidelity 529 a good plan?
The Fidelity 529 plans offer a decent variety of choices among pre-built portfolios and customization, but the plan's portfolio construction could be a concern for some. Fidelity offers the same choices to all four state plans it manages.
What is the average rate of return on 529 plans?
In 2011, people thought a rate of return around 3% for a 529 plan was amazing. Since 2011, the S&P's compounded annual growth rate (CAGR) is ~12% from June 2011 to June 2020. That is a lot more tax-free growth than the 3% account owners got back in 2011.
What does Dave Ramsey say about 529 plans?
Dave warns against using a 529 Plan that would freeze your options or automatically change your investments based on the age of your child. Stay away from so-called “fixed” or “life phase” plans. You want to stay in control of the mutual funds at all times.
Is now a good time to invest in 529 plan?
Though no one can guarantee exactly what the market will look like tomorrow, taking steps to prepare for the future can be beneficial in college savings just as it can be with retirement. If you are in a financial position to do so, continuing to invest in a 529 plan now may benefit you in the long run.
What happens to 529 if not used?
If you truly have no other use for your leftover 529 plan savings, you can always take a non-qualified distribution. Your contributions will never be taxed or penalized, since they were made with after-tax dollars. Any earnings on your investments, however, will be subject to income tax and a 10% penalty.
What happens to 529 if child doesn't go to college?
If assets in a 529 are used for something other than qualified education expenses, you'll have to pay both federal income taxes and a 10% penalty on the earnings. (An interesting side note is that if the beneficiary gets a full scholarship to college, the penalty for taking the cash is waived.)
How much should I contribute monthly 529?
What does this mean for you? Choosing a 529 plan could mean a much lower monthly contribution since the money grows over time. With a 529 plan, a solid monthly contribution amount for a child born in 2022 would be about $140 for a public in-state school, $215 for public out-of-state, or $350 for a private university.
How much should I save in my child's 529?
Like retirement accounts, 529 plans have tax advantages. But qualified accounts effectively lock the money up, forcing you to pay a penalty if you need it for something else other than education. Consider funding your kids' 529 plan with no more than 75% of the savings goal.
Do 529 plans vary by state?
The state contribution amount varies depending on state policy and available funds. Some states offer a contribution of state funds to low-income residents only. Of the states with a 529 plan, 11 have state contribution programs available to residents based on income level.
Why is Utah 529 the best?
It is a “direct sold” rather than a “broker sold” plan, so pays no commissions to “advisors”. This keeps costs low and avoids conflicts of interest. It offers the best advisor platform I have seen so far that allows a fee-only professional advisor like me to manage my clients' 529 plans efficiently from one screen.
Can I transfer 529 to another state?
You can transfer funds in a 529 plan from one state to another through a direct rollover from the old 529 plan to the new 529 plan. You can also transfer the 529 plan through a distribution-contribution combination.
What happens to 529 if not used?
If you truly have no other use for your leftover 529 plan savings, you can always take a non-qualified distribution. Your contributions will never be taxed or penalized, since they were made with after-tax dollars. Any earnings on your investments, however, will be subject to income tax and a 10% penalty.
Why should I consider saving for college in a 529 plan?
The biggest reasons to consider a 529 plan are the structured savings and the tax benefits. Merely having a specific college savings vehicle could...
What are the drawbacks of 529 plans?
Some consumers may be concerned about the possibility that investing for college could lead to losses on your contributions, rather than earnings....
What happens to money saved if my child doesn’t use it for college?
Money in 529 plans must be used to pay for qualified education expenses, which gives you less flexibility than if you’d saved in a brokerage accoun...
What is the future scholar 529?
The Future Scholar 529 College Savings Plan is only available to residents of South Carolina. It offers investment options from Columbia and Vanguard and a $426,000 contribution limit. Residents of South Carolina may enjoy a state tax deduction for contributions to the plan.
Who administers the 529 plan?
The Florida 529 Savings Plan is administered by the Florida Prepaid College Board. In September 2019 the Board enhanced the plan with expanded investment options, reduced fees, and additional investment managers. The plan offers an age-based option with a 16 step glidepath, six static options, and 15 individual funds.
What is Vanguard 529?
The Vanguard 529 College Savings Plan, offered by Nevada, is available to residents of any state, and offers low costs, experience and easy-to-manage savings options.
What is Invest529?
Invest529, Virginia's direct-sold college savings plan is available to residents of any state, and offers low fees, diverse investment options and tax benefits for residents.
When did the 529 change to Union Bank?
The manager for the Alabama CollegeCounts 529 Fund direct-sold savings program changed from Van Kampen to Union Bank and Trust Company in August 2010. It features age-based, static and individual fund portfolio options using mutual funds from multiple fund firms.
Is the 529 plan a state tax deduction?
The Maryland 529 -- Senator Edward J. Kasemeyer College Investment Plan is a direct-sold 529 plan available to residents of any state, and offers investment options from T. Rowe Price. Maryland residents may enjoy a state tax deduction for contributions to the plan.
Where does SavingForCollege score come from?
The performance score is derived from the analysis of performance as part of Savingforcollege.com’s 5-Cap Rating. See the methodology for more information.
What is a 529 plan?
A 529 plan is a state-sponsored savings plan that allows parents to invest funds that you or a separate beneficiary can withdraw tax free for qualified educational expenses. 3 Several states also offer 529 prepaid tuition plans, which allow parents to purchase credits that cover the cost of tuition when their son or daughter eventually heads to college. 17
Which states have 529 plans?
With the exception of Wyoming, every state (and the District of Columbia) operates at least one 529 savings plan. Here is a list of direct-sold plans by state, along with the annual expense ratio that they charge account holders. Direct-Sold 529 Plans by State. State. Plan Name.
How much can you withdraw from a secure retirement plan?
Also, the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was signed into law in December 2019, allows plan holders to withdraw a lifetime maximum of $10,000 for qualified student debt of the beneficiary. It can also be used to pay certain expenses related to apprenticeship programs, such as tuition, fees, books, and equipment. These withdrawals can be made both tax and penalty-free. 23
Which states offer tax breaks for contributions?
What’s more, seven “parity” states offer income tax breaks for contributions, regardless of which plan you use: Arizona, Arkansas, Kansas, Minnesota, Missouri, Montana, and Pennsylvania. 4 If you call one of these states home, you have even more incentive to shop around because you’ll get a tax deduction or credit anyway.
Do 529 plans have income tax deductions?
In addition, some states offer income tax deductions for residents who contribute to their plan. A few “parity” states extend those tax benefits even if you pick a 529 plan from another state. 4
Is there a 529 college savings plan in New York?
While New York’s 529 College Savings Program may not have the most investment choices around, there should be plenty here for all but the most finicky of investors. You can select from one of three age-based options, or you can design your own portfolio based on a mix of funds that meet your investment goals and risk tolerance .
The top-performing 529 plans
In producing our rankings, we compared the reported investment performance of a subset of portfolios from each 529 savings plan. The 'performance score' determines the ranking. For more details, please view our methodology.
How to rank 529 plan performance
Ranking over 3,000 investment options is no easy task, considering the wide variety of options found in 529 savings plans, and it requires a special methodology.
More information
Links to our full report on the composite rankings for this quarter are provided below for the direct-sold 529 plans.
How many investment options are there in 529?
Ranking over 3,000 investment options is no easy task, considering the wide variety of options found in 529 savings plans, and it requires a special methodology.
What is a smart 529?
The West Virginia SMART529 WV Direct College Savings Plan, available on a direct basis to those who meet certain West Virginia residency requirements, features a menu of age-based and static portfolio options utilizing index funds from Vanguard as well as an Invesco stable value portfolio option.
What is the 529 plan in Ohio?
The investment menu in Ohio’s 529 Plan, CollegeAdvantage, features 3 age-based options and 5 risk-based options using Vanguard funds, a college enrollment-based option and 13 static investment options using Vanguard and DFA funds, and 2 types of FDIC-insured deposit accounts through Fifth Third Bank, National Association. Accounts can be linked to the Upromise rewards service.
What is Vanguard 529?
The Vanguard 529 College Savings Plan, offered by Nevada, is available to residents of any state, and offers low costs, experience and easy-to-manage savings options.
Is there a 529 plan in Iowa?
College Savings Iowa is a direct-sold 529 college savings plan available to residents of any state offering low fees and 14 investment options from Vanguard. Iowa residents may enjoy a state tax deduction for contributions to the plan.
Who manages the Colorado Direct Portfolio College Savings Plan?
The team of Ascensus Broker Dealer Services, Inc. and The Vanguard Group manages the Colorado Direct Portfolio College Savings Plan. It features age-based and static portfolio options utilizing Vanguard mutual funds. Accounts can be linked to the Upromise rewards service.
Is 529 a state tax deduction in Pennsylvania?
Pennsylvania’s 529 Investment Plan is available to residents of any state, and offers 15 Vanguard investment options, including a socially responsible equity portfolio. Pennsylvania residents may enjoy a state tax deduction for contributions to the plan.
What is a 529 plan?
These state-sponsored savings plans are designed to encourage parents to invest in their child’s future by allowing earnings to grow tax-free. Withdrawals are also tax-free as long as they are used for qualified educational expenses — think tuition, books and necessary equipment. Plus, assets held in a 529 plan aren’t weighed as heavily toward your expected family contribution (EFC), meaning the amount you save won’t negatively impact eligibility for federal aid.
Why do we need a 529 plan?
Taking advantage of a 529 plan, and the many benefits they offer, can help parents sleep better at night knowing their children won’t one day be burdened by overwhelming student loan debt. These state-sponsored savings plans are designed to encourage parents to invest in their child’s future by allowing earnings to grow tax-free.
How do I open a 529 plan?
You can work with a financial advisor to open a 529 plan, or you can choose a direct-sold plan by yourself. Plans sold by financial advisors tend to be more expensive due to higher fees. Don’t forget that some professionals may not look out for your best interests, encouraging you to select investments that give them a higher commission. If you go the financial advisor route, make sure to do your research — asking for 529 account recommendations from trusted friends and family members is a great starting point.
How much does it cost to open a 529 account?
Most 529 plans don’t charge you a fee for opening an account, though you will be required to make an initial deposit to start choosing investments. There are, however, fees you will need to pay to maintain your account: underlying and administrative fees. Underlying fees goes toward funds you choose within your portfolio — these amounts are deducted by the funds themselves. Your 529 plan charges administrative fees for the upkeep of your account. Both types of fees are a percentage of the balance in your account.
What if I don’t use my 529 plan?
You can transfer your 529 account to another child, your grandchild or for your own qualified educational needs if your child winds up getting large grants or scholarships or doesn’t go to college. You can also roll over the funds to another family member’s ABLE account, which won’t incur any penalties. This type of account is for individuals who are disabled before turning 26 years old and receive social security insurance benefits.
What is Bright Start College Savings?
Like Utah’s 529 plan, the Bright Start College Savings programs offers a myriad of investment options, many of which are from well-respected companies such as T. Rowe Price and Vanguard —11 in total. There are three investment portfolio options — age-based, target and customizable. The age-based choices have varying risk tolerances, with asset allocations automatically rebalanced to more conservative investments the closer your child gets to college age. Target-based portfolios offer choices ranging from ones with safer securities all the way to equity-based investments.
How much can you invest in a 529 plan in California?
California’s 529 plan allows account holders to invest up to $529,000. In addition to no application, cancellation or transfer fees, you’ll find the expense ratios extremely competitive. Plus, the management fees are extremely low, making this plan one of the most cost-effective 529s out there.
What is a 529 plan in Michigan?
The Michigan Education Savings Program (MESP) is a highly-rated 529 plan that is available nationwide. It features an enrollment year option, six multi-fund options, a single fund option and a principal protection option.
What is a 529 plan in Pennsylvania?
The Pennsylvania 529 Investment Plan is a low-cost, direct-sold 529 plan that is available nationwide. It offers a variety of age-based and static Vanguard investment options, including a socially responsible equity portfolio.
What is SavingForCollege.com?
At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.
How much does a child receive from Keystone Scholars?
Every child born in the Commonwealth receives a $100 contribution through the Keystone Scholars Program.
Can you get a 529 tax credit?
You may also be able to boost your savings with a state income tax credit or state income tax deduction for 529 plan contributions (in all but seven of these states you must use your home state’s plan to qualify).
Is Ohio a 529 plan?
Ohio’s 529 Plan, CollegeAdvantage, is a low-cost, direct-sold 529 plan that is available nationwide. It offers age-based, risk-based and enrollment-based portfolios from Vanguard and DFA Funds, and two FDIC-insured investment options from Fifth Third Bank. Additional benefits.
