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.
Thursday, April 17, 2008
529 Plans: The Best and the Worst
Tuesday, October 30, 2007
529: Where age-based plans make sense
529 age-based plans have dominated this saving for college market. This is one of the few segments where time-based plans make sense for most investors, which is why more then 70% of funds in some plans are held in age-based 529 funds. The automatic adjustment as the child approaches college age help parents from regularly having to re-balance and monitor these funds.
The regulatory oversight from the states for their 529 plans have helped avoid the time-based college saving plans from becoming a pyramid of fees; a problem common in retirement fund-of-funds offerings.
The well-defined timeframes associated with saving for college are also beneficial to making these age-based plans successful; when a youngster is in 8th grade it is pretty clear how many more years until they go to school.
The lack of multi-level fund fees in many age-based 529 programs does not mean that parents should ignore the other fees found in many state plans such as yearly maintenance fees. Many plans are still charging $15 to $50 maintenance fees. It is very easy for a small 529 savings plan of $500 to lose money each and every year after fees are considered. It is very easy to land up with a balance of well under $400 in some plans after years of savings and “gains”, once the fees are subtracted. Take a close look at the fee structure in any 529 offering that you are considering; whether the plan is age-based or not.
Age-based funds dominate 529 plans
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20071029/FREE/710290345
