The Worst 529 Plans – 2009 Edition
Stumble It!
Digg It!
Tip It!
del.ico.us
FacebookAs a complement to this morning’s post on the best 529 plans, here’s a list of the worst 529 plans, once again courtesy of Consumer Reports. Without exception, these funds have to be purchased through a broker or financial advisor, which translates into significantly higher fees and correspondingly worse performance.
The five worst 529 plans
- Tomorrow’s Scholar (Wisconsin; Wells Fargo)
- John Hancock Freedom 529 (Alaska; T. Rowe Price)
- Franklin Templeton 529 College Saving (New Jersey; Franklin Templeton)
- Columbia New York Advisor 529 Plan (New York; UPromise/Columbia Management)
- Columbia 529 Plan (Nevada; Columbia Management)
Is your state on the list?
The good news for those that live in one of the states listed above is that most states offer multiple plans. Hopefully you’ll be able to find something more acceptable. If not, you may want to look outside your state. Yes, you’ll be giving up any possible state income tax breaks by doing this, but that’s probably a better option than putting your money into a bad plan.
Published on April 27th, 2009 - 5 Comments
Filed under: Education, Saving & Investing
email this article
- bookmark it
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
Related articles...
» The Best 529 Plans – 2009 Edition» The Best 401(k) Plans
» The Worst 401(k) Plans
» The Best 529 Plans, Revisited
» Should We Get Rid of 401(k) Plans?
» Most and Least Reliable Cars – 2009 Edition
» Sunday Roundup – Back to School Edition
» Ten Most Reliable Cars
Was this article useful? Please sign up to receive our content via e-mail:
Great deals...
Readers’ choice...
Recent articles...
- Effect of Foreclosure, Short Sale, and Bankruptcy on Your Credit Score
- DIY Garage Kayak Racks: Fast, Frugal, and Effective
- Lending Club $25 Bonus Reminder
- Coupons are a Waste?
- How to Save Money on Pet Care
- Best HSA Custodian?
- Considering a High Deductible Health Plan
- Pay Back the Homebuyer Tax Credit?
- How to Find a Good Deal
- How Much Does Your Debt Cost?
Recent comments...
- Jerry Robertson: Your article has great information about the large companies going out of business, but...
- laura: I have a foreclosure on my credit from Jan 2007 and my FICO score...
- nickel: Ron: Good question, and I have no idea as to the answer. It could...
- Christina: While foreclosures wreck less havoc on the score than a bankruptcy (according to your...
- Ron: Why do you think those large mortgage lenders are switching over to Vantage? Does...
- XY: I wish they would have special checkouts for people who plan to use 5...
- Live for Improvement: Going vertical with storage is definately the way to go! You should see my garage...
- Jessica: Just do a google search and it should be pretty easy to find. ...
Most talked about...
- Dave Ramsey is Bad at Math
- $8,000 Homebuyer Tax Credit
- Dish Network Customer Service SUCKS
- How to Claim the First-Time Homebuyer Tax Credit
- $15,000 Homebuyer Tax Credit
- Reduced Credit Limits? Share Your Experience
- Would the "Fair Tax" Gut the Economy?
- Tax Stimulus Rebate Payments to Start Early
- Pay Off Mortgage Early? Or Invest?
- The Best Online Savings Accounts (Updated!)
- Life's Too Short to Drink Cheap Beer
- $7500 First Time Homebuyer Tax Credit
Anyone reading this thinking they’d like to invest in Wisconsin’s plan should know the direct-sold EdVest plan (edvest.com) probably doesn’t rate as poorly as the Tomorrow’s Scholar program. It’s fee free to WI residents, and offers a state tax break. There are some decent funds to pick from, though not as many as other programs.
Comment by Justin — Apr 27th 2009 @ 3:42 pmI’m not surprised that NJ made the worst list. Even though there are no tax benefits, NJ residents may not want to entirely write it off. If you sock away only $300 per year for 12 years, NJ residents can get a $1,500 scholarship useable at any school in the state (public or private). The rest of your annual college savings can go into another, better state’s plan. Sure, you’ll pay more on that $300 due to the higher plan fees, but not even close to $1,500 more. Just don’t do more than the minimum to qualify.
Comment by Dylan — Apr 27th 2009 @ 6:39 pmAs a follow up to Justin’s comment about Wisconsin’s 529 program…as best I can tell Edvest = Tomorrow’s Scholar = Wells Fargo. I have a WI 529 through Edvest and had never heard of Tomorrow’s scholar until this article. But when I went to tomorrow’s scholar and tried my “Edvest” (really Wells Fargo) login, sure enough it worked. I’m not sure exactly what the relationship between Edvest and Wells Fargo is. They do offer a couple of Vanguard funds with lower expenses as well as Money Market and CD options, but otherwise CR is correct that the expense ratios are .79 and up.
Comment by Rob — Apr 27th 2009 @ 9:31 pmJust FYI a great option if you are in one of these states and decide to go out of state are the West Virginia and Illinois 529 plans which uses Dimensional Fund Advisors. They offer outstanding fund options.
Comment by Investing Made Simple — May 1st 2009 @ 12:11 pmIf we are investing in a “bad” 529 what should we do? We are investing through First Command (don’t get me started, we know how HORRIBLE they are) and have one plan through USAA. I don’t know what state First Command goes through but USAA goes through Nevada. We live in Virginia, but we are military so we probably won’t be here forever. What should we do??
Comment by Heather — Jun 12th 2009 @ 10:58 am