Tax-free withdrawals from 529s are now permanent, they don't hurt chances for financial aid and the offerings are better than ever. In other words, you'd be a fool to save for college any other way but in a 529 plan.
The real question is which plan to pick. There are some 85 plans available nationwide – the 70 largest are listed below - with almost every state offering at least one program and some, like West Virginia, offering as many as five.
All 529 savings plans provide the same federal tax benefits: Your investment earnings grow free of income tax. Your withdrawals, as long as you use them to pay higher education bills, are untaxed as well.
What you don't get is an up-front federal tax deduction.
But 32 states and the District of Columbia have stepped in where the feds have not, offering residents a write-off on state income taxes for at least a portion of their 529 contributions.
And three states - Kansas, Maine and Pennsylvania - even allow residents to deduct their contributions to out-of-state plans as well.
If you live in a high-tax state that offers a big deduction for 529 contributions, your best 529 plan is one in your own backyard - that is, as long as the plan also has reasonable expenses and offers solid investment choices. We selected 22 plans as top choices on this basis, in addition to another 5 whose strong management and low fees make them top choices not only for their own state's citizens, but for anyone whose in-state plan doesn't merit a star.
Arkansas |
GIFT College Investing Plan |
Upromise and Vanguard / Vanguard mutual funds |
www.thegiftplan.com |
Colorado |
Direct Portfolio College Savings Plan |
Upromise and Vanguard / Vanguard mutual funds |
www.collegeinvest.org |
Connecticut |
Connecticut Higher Education Trust (CHET) |
TIAA-CREF / TIAA-CREF mutual funds |
www.aboutchet.com |
Georgia |
Georgia Higher Education Savings Plan |
TIAA-CREF / TIAA-CREF mutual funds |
www.gacollegesavings.com |
Kansas |
Learning Quest 529 Education Savings Program |
American Century / Multiple fund families |
www.learningquest.com |
Louisiana |
START Saving Program |
Louisiana State Treasurer / Multiple fund families |
www.startsaving.la.gov |
Maryland |
College Savings Plans of Maryland - College Investment Plan |
T. Rowe Price / T. Rowe Price mutual funds |
www.collegesavingsmd.org |
Mississippi |
Mississippi Affordable College Savings (MACS) Program |
TIAA-CREF / TIAA-CREF mutual funds |
www.collegesavingsms.com |
Missouri |
MOST - Missouri's 529 College Savings Plan |
Upromise Investments / Multiple fund families |
www.missourimost.org |
Nebraska |
College Savings Plan of Nebraska |
Union Bank and Trust Company / Multiple fund multiple fund families |
www.planforcollegenow.com |
New York |
New York's 529 College Savings Program - Direct Plan |
Upromise and Vanguard / Vanguard mutual funds |
www.nysaves.org/ |
North Carolina |
National College Savings Program |
College Foundation, Inc. / Multiple fund families |
www.nc529.org/ |
North Dakota |
College SAVE |
Upromise Investments / Vanguard mutual funds |
www.collegesave4u.com/ |
Ohio |
CollegeAdvantage 529 Savings Plan |
Ohio Tuition Trust Authority / Multiple fund families |
www.collegeadvantage.com |
Oklahoma |
Oklahoma 529 College Savings Plan |
TIAA-CREF / TIAA-CREF mutual funds |
www.ok4saving.org |
Oregon |
Oregon College Savings Plan |
OppenheimerFunds / OppenheimerFunds and Vanguard mutual funds |
www.oregoncollegesavings.com |
Pennsylvania |
Pennsylvania 529 Direct Investment Plan |
Upromise Investments and Vanguard / Vanguard mutual funds |
www.pa529direct.com |
South Carolina |
Future Scholar Direct Program |
Columbia Management / Columbia mutual funds, Transamerica Life |
www.futurescholar.com |
Vermont |
Vermont Higher Education Investment Plan |
TIAA-CREF / TIAA-CREF mutual funds and Vermont Student Assistance Corporation interest-bearing notes |
services.vsac.org/ilwwcm/connect/VSAC |
Virginia |
Virginia Education Savings Trust (VEST) |
Virginia College Savings Plan Board / Multiple funds |
www.virginia529.com |
West Virginia |
SMART529 Select |
Hartford Life / Hartford and INVESCO mutual funds |
www.smart529select.com |
Wisconsin |
EdVest |
Wells Fargo / Multiple funds including Wells Fargo Funds |
www.edvest.com |
The five plans below are good for their own state's citizens, but also for anyone whose in-state plan doesn't merit a star. |
California |
The ScholarShare College Savings Plan |
Fidelity Investments / Fidelity Investments mutual funds |
www.scholarshare.com |
Iowa |
College Savings Iowa |
Upromise Investments and Vanguard / Vanguard mutual funds |
www.collegesavingsiowa.com |
Michigan |
Michigan Education Savings Program |
TIAA-CREF / TIAA-CREF mutual funds |
www.misaves.com |
Nevada |
The Vanguard 529 Savings Plan |
Upromise Investments and Vanguard / Vanguard mutual funds |
www.vanguard.com |
Utah |
Utah Educational Savings Plan (UESP) Trust |
Utah Higher Education Assistance Authority / Public Treasurer's Investment Fund and Vanguard mutual funds |
www.uesp.org/ |