Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
As a followup to my recent article on 529 plans, I thought I’d highlight the most recent batch of 529 plan ratings from Consumer Reports. For those that aren’t familiar with them, 529 plans are tax-advantaged savings plans that are designed to encourage people save for future college costs.
The following list of the best 529 plans is based on investment flexibility, fees and expenses, and 2008 performance. While it’s tough to learn much from performance during such a dismal year, some plans have clearly been holding inappropriate allocations. For example, one of Utah’s age-based portfolios, which is targeted at students over the age of sixteen (i.e., with just 1-2 years before they need the money), was so heavily weighted toward stocks that it lost over 26% last year.
With that as a backdrop, here are the ratings…
The five best 529 plans
- Path2College 529 Plan (Georgia; TIAA-CREF)
- College Savings Iowa (Iowa; Vanguard/Upromise)
- Bright Start College Savings Program (Illinois; Oppenheimer)
- Mississippi Affordable College Savings Program (Mississippi; TIAA-CREF)
- Direct Portfolio College Savings Plan (Colorado; Vanguard/Upromise)
Note that, as long as you’re using a “college savings plan” as opposed to a “pre-paid tuition plan,” you’re not locked into a particular school (or even state). See my earlier article for details.
Don’t forget the tax breaks
Another factor to consider is that many 529 plans offer state residents an income tax deduction on at least a portion of their contributions. While that won’t be enough to tip the scales in favor of a fee-laden plan, it might be enough to make a decent plan look great.
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (692)
- Dish Network Customer Service SUCKS (534)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (325)
- How Much Should You Pay a Babysitter? (284)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (227)
- Will Mac OS X Lion Kill Quicken 2007? (191)