What Are The Best 529 College Funds?
529 college savings plan is gaining immense popularity on account of its federal tax exemption benefits and summa cum laude investment dreams. A total of $200 billion was invested in 2007 whereas in 2002 only $25 billion was invested. A 529 plan is tax advantaged savings plan. It is designed to enable families to save for their child's college expenses. Legally known as qualified tuition plans, the 529 college savings plan is carried out by states, state agencies or educational institutions. The 529 plans were incorporated in Section 529 of the Internal Revenue Code. Even with rise and fall in the stock markets, these plans have performed immensely well as the amount invested is guaranteed by the state. These plans offer a plethora of investment options, from risky portfolios to moderate and ultra-conservative investment options. The 529 college expenses plan offered by each state has its own set of investment options. In most of the cases, the states allow investors from outside. The 529 college expenses plan provides a plethora of state tax and other advantages. For example, state tax deduction, exemption from state financial aid calculations, and protection from creditors, matching grant and scholarship opportunities. These benefits are usually given to those investors who invest in the 529 plans in their sate of residence. There are about 70 plans available, so which ones are among the best 529 college funds? One should first look at the 529 college savings plan that their home state offers as this can provide major tax benefits. Another thing that families should look into is the expenses of the plan. This includes maintenance fees, annual fees, and mutual fund expenses. If it is below 1% it is cheap. If it is above 5%, it should be considered expensive. The investment options offered should also be given due consideration while choosing the best the best 529 college funds. It should match one investing style and risk resistance. Most of the 529 college funds have pre-planned investment options. It could be 100% stocks, 100% bonds or a fixed combination. The performance of the plan in the previous years is also important while selecting the best 529 college funds. In age-based portfolios, only two plans- Kansas and Nebraska have earned positive returns. If your home state doesn't offer the best 529 college funds, the following list could help you in choosing the right one. But remember, no plan is completely flawless. For Conservative Investors: TIAA-CREF is the best 529 college funds in this category. In this, the plans that Michigan and Minnesota offers are good considering they are not expensive and have performed well over the years. For Aggressive Investors: Iowa and Utah and Nevada's Upromise plan are the best 529 college funds in this category. Through a broker: Virginia and West Virginia's plans offer the best investment options. |
