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A 529 savings account is an efficient way to save and invest toward your child's future education expenses. The top 529 plans may also give you a tax break on your state income tax return. Opening a 529 plan early can reduce future out-of-pocket expenses. But not all 529 plans are built the same.
It's important to note that not all 529 accounts are built the same as they vary by state. But which state has the best 529 plan?
The good thing is that a majority of the best-performing 529 plans are eligible for out-of-state residents, so you're not necessarily limited to the programs attached to your own state. However, you may lose some of the strongest benefits with an out-of-state plan.
Best 529 plans in 2024
- Bright Start Direct-Sold College Savings Program (Illinois)
- U.Fund College Investing Plan (Massachusetts)
- Oregon College Savings Plan
- Ohio's 529 Plan CollegeAdvantage
- UNIQUE College Investing Plan (New Hampshire)
- ScholarShare 529 (California)
- Pennsylvania 529 Investment Plan
- my529 (Utah)
- New York's 529 College Savings Program
- Alaska 529
Top-Rated 529 Plans
The best 529 plans are state-run programs managed by brokerages, banks, and other financial institutions. While similar to the best custodial brokerage accounts, 529 college savings accounts have their own rules, contribution limits, and tax advantages.
Make sure to thoroughly compare the top 529 plan reviews and the best-performing 529 plans to find the right education savings account for you.
Here are some of the best 529 plans by state as picked by Business Insider's editors in 2024.
1. Bright Start Direct-Sold College Savings Program (Illinois)
Bright Start Direct-Sold College Savings Program is one of the available 529 plans with low fees, including no minimum deposit requirement. You can invest in multi-firm or index-based age-based investment options (including six target-risk portfolios, 17 individual fund investment portfolios, and mutual funds from Vanguard, DFA, T.Rowe Price, and more.
Bright Start also offers one of the best tax advantages for Illinois residents: married couples can deduct up to $20,000 annually. ($10,000 per individual taxpayer). Moreover, qualifying expenses aren't subject to state income tax.
Account minimum: $0
Fees and expenses:0.10% program management fee, $0 account maintenance fee, 0.02% to 0.67% fee for portfolios
Total asset-based expense ratio: 0.07% to 0.77%
2. U.Fund College Investing Plan (Massachusetts)
This Fidelity-managed, Massachusetts advisor-sold 529 plan offers an age-based, static portfolio and an interest-bearing account option of Fidelity mutual funds and index funds portfolio. There's no account minimum and no annual account fees, but you must meet a $15 monthly contribution minimum requirement.
You can get up to a $2,000 state income tax deduction ($1,000 for individuals).
Account minimum: $0
Fees: up to 0.45% program management fee
Total asset-based expense ratio:0.11% to 0.95%
3. Oregon College Savings Plan
Who can open an account:Anyone in the US
Sumday Administration, LLC manages this Oregon-based, direct-sold savings plan. For a $25 minimum, you'll access mutual funds from various fund families (such as Vanguard, T.Rowe Price, and American Beacon) and an FDIC-insured option. It offers age-based/enrollment year portfolio options and static investment portfolio options.
Rather than a tax deduction, investors get a refundable tax credit of up to $360 (varies by income).
Account minimum: $25 ($5 per month with automatic investment plan)
Fees: 0.20% program management fee
Total asset-based expense ratio:0.20% to 0.65%
4. Ohio's 529 Plan, CollegeAdvantage
For a low $25 minimum, the Ohio-based 529 direct-sold savings plan offers a diverse selection of age-based, enrollment-based Vanguard and DFA mutual fund portfolios with tax-free growth. Plus, an individual fund portfolio option. You can also invest in CDs through a Fifth Third Bank savings account ($500 minimum). Single and joint filers can get a tax deduction of up to $4,000 annually.
The downside of Ohio's 529 Plan is there's no online gift portal to share with friends or family for easy contributions. Instead, you can only receive gift certificates or mail-in-gift certificates.
Account minimum:$25 minimum ($500 for Fifth Third Bank)
Fees:0.105% managers fee, 0.02% state fee, 0.107% program management fee, between 0.02% to 0.31% on portfolios
Total asset-based expense ratio:0.145% to 0.435% (none for Fifth Third Bank option)
5. UNIQUE College Investing Plan (New Hampshire)
Fidelity manages this low-cost direct-sold savings plan of actively managed mutual funds and index funds for no minimum deposit. It offers age-based/enrollment year portfolio options and static investment options (including interest-bearing accounts and stable value portfolios). If you opt-in for the automatic investment plan, you must meet the $15 monthly contribution (or $45 per quarter).
New Hampshire's UNIQUE College Investing Plan offers one of the largest maximum contribution limits of up to $614,551 per beneficiary. However, it does not offer an annual tax deduction benefit.
Account minimum: $0
Fees:up to 0.17% program management fee, up to 0.78% underlying investment fees
Total asset-based expense ratio:0.10% to 0.95%
6. ScholarShare 529 (California)
ScholarShare 529 is one of the best 529 plans for California residents and could be a good option for out-of-state participants. This college savings 529 account is a flexible plan offering state-tax incentives, an easy-to-access gifting platform, and unique investment portfolio options (age-based, enrollment-based, multi-fund, individual-fun, and a principal protection portfolio. This California 529 plan even offers an ESG portfolio option for socially responsible investing,
Although contributions aren't eligible for tax deductions, earnings grow tax-deferred. Remember that all withdrawals for qualifying academic expenses from 529 plans are tax-free.
Account minimum: $0
Fees: up to 0.06% program management fee (varies by portfolio option), 0.03% to 0.35% underlying investment fee
Total asset-based expense ratio:0.04% to 0.41%
7. Pennsylvania 529 Investment Plan
With Pennsylvania's 529 plan, you can access 26 Vanguard investment options, including multi-fund static portfolios based on risk tolerance, Target Enrollment portfolios of Vanguard mutual funds, and a socially responsible equity portfolio.
The 529 account is managed by the Pennsylvania Treasury Department, Vanguard, and Ascensus, with no minimum requirement (subsequent deposits must be at least $1) and up to $36,000 annual tax deduction ($18,000 for single filers) for in-state and out-of-state residents.
Account minimum: $0
Fees: $10 account maintenance fee (waived for automatic investing accounts), 0.29% program management, between 0.02% and 0.12% for underlying investments
Total asset-based expense ratio:0.1875% to 0.2875%
8. my529 (Utah)
my529 is a direct-sold savings plan consisting of Vanguard and Dimensional mutual funds, plus a PIMCO Interest Fund account option. There are also FDIC-Insured accounts available through Sallie Mae Bank and US Bank. my529 offers a wide range of age-based, enrollment-based, and static portfolio options, such as a customized static portfolio of up to 30 hand-picked underlying funds.
This 529 plan's tax benefits are more limited than other plans on this list. Utah residents can receive a tax deduction of 4.65% up to $224 per year (up to $112 per year for single filers).
Account minimum: $0
Fees: 0.10% to 0.13% program management fee, up to 0.325% underlying investment fee
Total asset-based expense ratio:0.100% to 0.221%
9. New York's 529 College Savings Program
New York's low-cost 529 College Savings Program is a direct-sold plan offering a huge selection of diverse Vanguard mutual funds through age-based/enrollment year portfolios (including risk level options) and static investment portfolios (including multi-fund options, individual fund options, and Interest Accumulation portfolio option).
Moreover, there are no underlying investment expenses, as it's included in the program management fee. Joint filers can deduct up to $10,000 a year ($5,000 for individuals).
Account minimum: $o
Fees: 0.12% program management fee
Total asset-based expense ratio:0.12%
10.Alaska 529
Alaska 529 (previously called the University of Alaska College Savings Plan) is a low-cost account of age/enrollment-based and static portfolios of T.Rowe Price mutual funds. Invest in unique multi-fund options like an Equity Portfolio, University of Alaska Portfolio, Fixed-Income Portfolio, and more.
Not only does Alaska 529 have one of the lowest expense ratios, but it also offers additional benefits for future University of Alaska students. However, there are no tax deduction benefits.
Account minimum: $25
Fee: up to 0.05% program management fee, underlying investment fee ranging from 0.07% to 0.78%
Total asset-based expense ratio:0.15% to 0.87%
Finding the Best 529 Plans for Your Needs
The best way to choose a 529 plan is to start with your state's own plan, as you're more likely to benefit from in-state exclusive tax deductions or credits from your 529 plan contributions. Remember, although many states offer tax deduction benefits, it is not always available to out-of-state participants.
Plus, some 529 plans don't offer tax deductions. For example, Pennsylvania's 529 plan offers one of the more lucrative tax advantages, up to a $36,000 annual tax deduction for both in-state and out-of-state participants. But Alaska's 529 doesn't offer any sort of tax deduction for any participant.
Factors to Consider When Choosing a 529 Plan
Other factors you'll want to take into consideration are the:
- Minimum investment requirements: Many 529s are generally low-cost with no (or low) minimum deposit requirement to open. Still, evaluating the cost of joining a program and whether you're obligated to contribute a certain subsequent amount over time should factor into your decision.
- Fees and costs: High fees can eat away at your investment gains. Fees associated with 529s are program management fees, account maintenance fees, and underlying investment fees.
- Investment options: 529s generally offer a range of mutual funds and index funds from different brokerages and banks, so make sure you pick a program with funds that align with your preferences. Most 529s offer static, age-based, and enrollment-based portfolios. But there are also more unique portfolio options, such as ESG portfolios or interest-bearing, that aren't available with all 529 programs.
- Type of plan:When deciding which 529 plan is best for you, consider whether you'd like to participate in an education savings plan or a prepaid tuition plan. Most of the best 529 plans are normally education savings plans, but you may prefer to lock in tuition rates and opt-in for a pre-paid plan.
If your state's plan doesn't have what you're looking for, compare other eligible out-of-state plans with low fees, diverse investment options, and worthwhile tax benefits. Make sure to understand the specific 529 account rules before opening an account.
Some great resources to compare and research different 529 programs are Savingsforcollege.com and Morningstar. Comparing these different program's 529 tax benefits, rules, and limits.
If you're having trouble figuring out how to choose a 529 plan, you can consult a CFP specializing in education savings plans for personalized insight and guidance on 529s.
529 plans FAQs
Is there a limit to how much I can contribute to a 529?
There isn't a universal limit on how much you can contribute to a 529 plan. However, individual states may enforce their own contribution limits. Remember that you can open more than one 529 plan at a time, and most states allow out-of-state participants.
Can I use a 529 for K-12 expenses?
Yes. You can use a 529 plan to pay for K-12 tuition, school supplies, and other relevant education expenses. The funds in a 529 plan aren't restricted to only college tuition. 529s can be used for vocational school, apprenticeships, and student loan payments.
What if my child doesn't go to college?
If your child doesn't go to college, you can change the beneficiary of your 529 plan to another child. The funds in a 529 can also be used for other education expenses like vocational school, student loan payments, apprenticeships, and school supplies. Your other option is a penalty-free transfer into a Roth IRA.
Should I use my state's plan?
Which 529 plan is best for you may be your own state's plan as you are more likely to benefit from an in-state tax deduction. However, if your state's plan is not a good fit, you can consider another state to find what 529 plan is best for you based on fees, tax benefits, and investment options. You can learn more about 529 plans with comprehensive sites like savingforcollege.com
Our Methodology: How We Reviewed The Best 529 Plans
We reviewed the best-performing 529 plans using Business Insider's rating methodology for investment platforms. But how are the best state 529 plans determined? Well, 529s are analyzed on various factors, including the best perks, tax benefits, fees, and more.
People may have varying risk capacities and financial goals they're working toward, but you'd be hard-pressed to find someone who doesn't prefer a cheaper way to invest. Therefore, the cost was a huge factor in determining our list.
Investing and Retirement Reporter
Tessa Campbell is an investing and retirement reporter on Business Insider’s personal finance desk. Over two years of personal finance reporting, Tessa has built expertise on a range of financial topics, from the best credit cards to the best retirement savings accounts.ExperienceTessa currently reports on all things investing — deep-diving into complex financial topics, shedding light on lesser-known investment avenues, and uncovering ways readers can work the system to their advantage.As a personal finance expert in her 20s, Tessa is acutely aware of the impacts time and uncertainty have on your investment decisions. While she curates Business Insider’s guide on the best investment apps, she believes that your financial portfolio does not have to be perfect, it just has to exist. A small investment is better than nothing, and the mistakes you make along the way are a necessary part of the learning process.Expertise:Tessa’s expertise includes:
- Credit cards
- Investing apps
- Retirement savings
- Cryptocurrency
- The stock market
- Retail investing
Education:Tessa graduated from Susquehanna University with a creative writing degree and a psychology minor.When she’s not digging into a financial topic, you’ll find Tessa waist-deep in her second cup of coffee. She currently drinks Kitty Town coffee, which blends her love of coffee with her love for her two cats: Keekee and Dumpling. It was a targeted advertisem*nt, and it worked.
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