You Better Shop Around for Your 529 Plan

Physician's Money DigestNovember 2007
Volume 14
Issue 11

Not all 529 plans are created equal. They vary in tax benefits, management fees, and program managers. According to Money magazine, the best in-state 529 plans in terms of tax breaks and reasonable expenses include Arkansas, Colorado, Connecticut, Georgia, Kansas, Louisiana, Maryland, Mississippi, Missouri, Nebraska, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Vermont, Virginia, West Virginia, and Wisconsin.

Don't live in the above states? Don't fret. Many states offer great rates and management options to out-of-state investors. You may want to choose one of the following for your 529 plan. California's plan is backed by Fidelity Investments and features six funds to choose from at an expense rate of 0.50% to 1.10%. Iowa's plan also has a low expense rate of 0.62%, and Michigan features the low fee rate of 0.45%. Nevada offers three age-based funds and five multifunds. Utah offers the cheapest plan with fees as low as 0.25% to 0.38%. Kansas, Maine, and Pennsylvania allow you to deduct your contributions to out-of-state plans. Be aware that managers and fees can change in the future.

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