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We’re in the market for the “best” 529 plan available. I’ll preface this by saying that I’m partial to Vanguard, and primarily looking at fees and investment options — I prefer making my own investment decisions on something like this as opposed to going with an age-based option. I’m also interested in identifying plans with high maximum contribution limits. I should also note that our state does have a plan with state tax benefits, but we exceed the income limits for deducting even a small portion of our contributions. Beyond that, the plan isn’t all that good, so I’m looking elsewhere.
I’ve heard especially good things about the Utah plan, which has five age-based options as well as four static options – not complete flexibility, but I can probably make do with the static options. They assess an administrative fee of 0.25% of invested assets plus
$25 $20 per year (this latter fee is actually $5 $4 per $1000 invested, up to a maximum of $25 $20). In addition to this, investments are subject to Vanguard’s fees, which range form 0.025% to 0.13% for the fund combinations available. This means that the management fees will be less than 0.40% of invested assets per year, not including the $25 flat fee. Oh, and they currently have a maximum contribution limit of $319,000.
From what I’ve seen, this makes Utah look like one of the cheapest and most attractive plans, but I was wondering if anyone out there has specific recommendations as to other programs that we should be looking at…
Update: Illinois has just re-worked their 529 plan, known as BrightStart, to include Vanguard Index Funds as an option (they also have actively-managed Oppenheimer funds). Their expenses are low (a total of 0.20-0.23% for the Vanguard funds plus a $10 annual account maintenance fee) and their investment options look similar to Utah. If you’re concerned about maximum contributions, however, they’re capped at $235,000 in Illinois, considerably lower than what is available in Utah). The new plan was made available yesterday.
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