529 Plans: The Best and the Worst

A recent Morningstar article outlined the Best and Worst 529 College Saving Plans. States are regularly altering their plans to improve them (hopefully) so the rankings change every year. Another excellent 529 plan resource is the SavingForCollege website.

It is best to not take any plan offered through a broker, but always go direct to the state to set-up a 529 savings plan. This helps the investor to avoid the pile of fees that many brokerages add on top of base plans. "Broker sold" is bad news in 529 plans.

Another issue to keep in mind is the pending legislation in some states that improve the tax benefits if you select the plan of the state you live in. Some states are also proposing additional savings benefits for selection the home-grown plan. Pay attention to any pending 529 proposals in your state legislature when determining which plan may be best for you.