Best 529 Plans

There are a lot of reasons to like Ohio’s CollegeAdvantage 529 plan—and a history of generating above-average returns is certainly one of them. According to Savingforcollege.com’s quarterly performance review for Quarter 2 of 2021, the program is tops in the nation for 10-year returns.

There’s no shortage of investment choices here, either. As with Illinois’ Bright Start plan, you can choose an age-based portfolio that becomes more conservative over time or risk-based portfolios that match your desired level of risk and reward but do not change the overall asset mix as your child or grandchild gets older. You can also customize your basket of investments by choosing your own mix of stock and bond funds. The plans include funds from Vanguard and Dimensional Fund Advisors, as well as Federal Deposit Insurance Corporation (FDIC)–insured certificates of deposit (CDs) and bank accounts.

From a fee standpoint, Ohio’s plan is one of the best around. Age-based options range between 0.15% and 0.31% annually, well below the national average. And risk-based and individual options are all 0.44% or less.

No doubt that Ohioans have a strong incentive to sign up, with state tax breaks of up to $4,000 per beneficiary per year. However, with a stellar track record, numerous investment options, and low fees, people outside the Buckeye state will want to take notice as well.

With 12 different investment possibilities, there’s an option for virtually anyone. You’ll find four age-based portfolios; ten “static” options, for which the asset mix doesn’t change over time, and two customized portfolio options. The underlying funds are managed by some well-regarded companies, including Vanguard and bond fund giant PIMCO.

With the age-based options, account owners can choose their level of risk and potential reward. The “aggressive global” portfolio invests the highest portion of assets in U.S. and foreign stocks at the start and gradually increases its exposure to the bond market. At the other end of the spectrum is the “conservative” option, which holds the smallest percentage of equities.

As you’d expect from a leading 529 plan, its fees are reasonable, ranging from 0.12% to 0.50%. Also, there’s no annual maintenance fee or account origination fee to worry about.

It’s no slouch in the performance department, either, earning a 4.5 out of five possible “caps” from Savingforcollege.com on its “5-Cap” rating system. Combined with its abundance of choice and its low costs, Utah’s plan is very much worthy of consideration from folks in other states.

In terms of sheer selection, Illinois’ Bright Start college savings plan is a tough one to beat. The program offers investment options from ten—yes, ten—different fund companies, including such respected names as Vanguard and T. Rowe Price. Account owners can choose among three basic investment types:

• Age-Based Portfolios: The portfolio gradually adjusts from more-aggressive choices (e.g., a stock-heavy mix) when the beneficiary is younger to a more conservative (i.e., a bond and money market–heavy) mix when they approach college age.
• Target Portfolios: The plan offers six different target portfolios that maintain a consistent mix of asset classes over time. You can choose more equity-focused portfolios or those that lean toward safer securities.
• Individual Portfolios: Owners can tailor individual fund portfolios based on their own risk-reward profile.

Choice isn’t the only thing to like about this Illinois 529 plan—its portfolios, for the most part, have been solid achievers. Savingforcollege.com gives Bright Start a performance rating of 4.5 “caps,” putting it toward the top of all direct-sold plans.

One of the reasons for its strong performance may be the program’s highly competitive expense schedule. Depending on the portfolio you choose, management fees range from 0.09% to 0.81%. The program has no yearly maintenance fee, and there is no minimum initial contribution to get started.

Age-based configurations charge between 0.10% and 0.39% in management fees, with an individual portfolio costing 0.00% to 0.56%. There is no enrollment fee when you open an account and no annual maintenance fee that will eat into your balance. You’ll find age-based and static portfolio options as well as an FDIC-insured savings account for more risk-averse parents or those whose children are only a couple of years away from college.

The underlying funds include selections from giants, such as Vanguard and Blackstone, as well as some lesser-known companies, such as Rothschild Asset Management and Stone Harbor Investment Partners. By and large they’ve been excellent performers. Invest529 gets a 4.5 “cap” rating out of five for performance from Savingforcollege.com.

Those individual portfolios don’t automatically shift your asset mix over the years like age-based ones, so they require a bit of maintenance. New York’s plan lets you move funds between portfolios up to twice a year, in case you want to do some fine-tuning.

As you’d expect with a Vanguard product, the fees in the plan are among the best in the country at just 0.12%, regardless of whether you use age-based or custom portfolios. In terms of performance, it’s near the head of the class, with a 4.5-“cap” rating from Savingforcollege.com.