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I’ve written previously about what I think are the three best 529 plans, so I listened with great interest when Brian Preston covered college savings during a recent episode of the Money Guy podcast. During this episode, Brian talked about his favorite 529 plans and also listed seven of the worst plans according to Morningstar.
For reference, I previous picked the following three as my top choices:
Click through to my original “Best 529 Plans” post to get details as to why I like these plans. In short, they all feature Vanguard funds and have dirt-cheap fees.
Next up, we have the Money Guy’s favorites:
First, you’ll notice that the only overlap between our lists is Utah. While there’s nothing particularly bad about the balance of his favorites, their fees aren’t quite as low as in the plans that I picked. Like Utah, New York is a Vanguard plan. In contrast, Alaska and Georgia are T. Rowe Price plans, whereas California features Fidelity funds. I should also note that he’s partial to Georgia because that’s where he lives, and he gets a state tax break.
Now for the Morningstar list of the worst 529 plans:
Alabama Higher Education 529 Fund (Van Kampen)
Arizona PF 529 College Savings Plan (Pacific Funds)
Arizona SM&R Family College Savings Program (SM&R/Alger)
Nebraska AIM College Savings Plan (AIM)
North Carolina National College Savings Program (Seligman)
North Dakota College SAVE (Morgan Stanley)
Wyoming College Achievement Plan (Merrill Lynch)
Finally, a word to the wise… Many states have multiple plans, so be sure you’re getting the one that you want.
[Source: Money-Guy.com, 10/08/2007]