Best 529 Plans

You are not restricted to choosing your state’s 529 plan

We publish unbiased product reviews; our opinions are our own and are not influenced by payment we receive from our advertising partners. Learn more about how we review products and read our advertiser disclosure for how we make money.

The cost of a college education is a scary proposition for all but the most affluent of parents. Contributing over time to a 529 savings plan can go a long way toward ensuring that your children aren’t loaded with debt by the time they graduate.

As long as students withdraw funds for qualified education expenses—and that covers everything from tuition and fees to books and computers—you don’t have to pay any tax whatsoever on any gains that have accumulated in the account. Also, putting aside money in a 529 won’t make a substantial difference when it comes to your financial aid package. If the account is owned by a parent or a dependent child, less than 6% of the assets count toward your expected family contribution, a key metric used in calculating a student's reward.

When choosing a 529, your own state’s plan is a great place to start, as many offer income tax benefits to residents when they make contributions. Still, it’s worth keeping in mind that most plans accept investors from anywhere in the U.S.—and you can use money from any college savings program to pay for college, even if the institution is in another state.

What’s more, seven “parity” states offer income tax breaks for contributions, regardless of which plan you use: Arizona, Arkansas, Kansas, Minnesota, Missouri, Montana, and Pennsylvania. If you call one of these states home, you have even more incentive to shop around because you’ll get a tax deduction or credit anyway.

For parents and grandparents who are considering an out-of-state option, we compiled a list of the five best 529 plans from around the country.

The Best 529 Plans

  • CollegeAdvantage (Ohio)
  • my529 (Utah)
  • Bright Start (Illinois)
  • Invest529 (Virginia)
  • NY’s 529 College Savings Program (New York)

CollegeAdvantage - Ohio

CollegeAdvantage

There are a lot of great 529 plans for out-of-staters to consider, but our valedictorian is Ohio’s CollegeAdvantage. The combination of investment options, performance, and fees makes it an overall winner.

Pros
  • Impressive five-out-of-five-stars performance rating from Savingforcollege.com

  • Choice of age-based or customized investment portfolios

  • Highly competitive administrative fees

Cons
  • Not much

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, the program is tops in the nation for five- and 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 0.19% and 0.32% annually, well below the national average. And risk-based and individual options are all under 0.54%.

No doubt that Ohioans have a strong incentive to sign up, with state tax breaks of up to $4,000 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.

my529 - Utah

My529

Utah’s my529 program has had quite a run. The college savings plan snagged its ninth-straight “Gold” rating from Morningstar, evidence of the state’s prudent management.

Pros
  • History of being prudently managed

  • Low expense ratios and no annual maintenance fees

  • A perennial “Gold” rating from the analysts at Morningstar

  • One of the best performance records of any 529 plan

Cons
  • No glaring weaknesses

With 13 different investment possibilities, there’s an option for virtually anyone. You’ll find five age-based portfolios; seven “static” options, for which the asset mix doesn’t change over time; and a customized portfolio option. 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 0.13% to 0.56%. 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.

Bright Start - Illinois

BrightStart

With a tax deduction of up to $10,000 for single filers and $20,000 for couples, Illinois’ 529 is a great way to invest for your child’s college years. It also happens to be a solid choice for parents who live in states with a less enticing plan.

Pros
  • A massive selection of investment choices that will keep even the pickiest parents satisfied

  • Good performance track record for most of its funds

  • A mere $25 contribution to open an account

Cons
  • Past investment performance solid, but not the best on this list

In terms of sheer selection, Illinois’ Bright Start college savings plan is a tough one to beat. The program offers investment options from 11—yes, 11—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 0.17% to 0.65%. The program has no yearly maintenance fee, and you only need a $25 initial contribution to get started.

Invest529 - Virginia

Invest529

Virginia’s direct-sold plan, Invest529, offers a compelling mix of features, such as low costs, ample portfolio options, and a strong track record. Citing its “excellent state oversight,” the investment research firm Morningstar gave the plan its top “Gold” rating in 2019.

Pros
  • Reputation for being a particularly well-run plan

  • Lots of investments choices, including an FDIC-backed savings account that may be appealing for children who are closer to college age

  • No annual maintenance fees

Cons
  • Strong performance of investment choices matched by other 529 plans

Age-based configurations charge between 0.15% and 0.69% in management fees, with an individual portfolio costing 0.10% to 0.63%. There’s a modest $25 enrollment fee when you open an account but 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 Templeton, 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 four-“cap” rating out of five for performance from Savingforcollege.com. 

NY’s 529 College Savings Program – New York

NY 529

While New York’s 529 College Savings Program may not have the most investment choices around, there should be plenty here for all but the most finicky of investors. You can select from one of three age-based options, or you can design your own portfolio based on a mix of funds that meet your investment goals and risk tolerance.

Pros
  • Fees of just 0.13% for all portfolio types

  • Terrific track record when it comes to investment performance

  • Generous tax breaks for New York residents

Cons
  • Only offers investment products from one mutual fund company

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 0.13%, regardless of whether you use age-based or custom portfolios. In terms of performance, it’s near the head of the class, with a five-“cap” rating from Savingforcollege.com.

What Is a 529 Plan?

A 529 plan is a state-sponsored savings plan that allows parents to invest funds that you or a separate beneficiary can withdraw tax free for qualified educational expenses. Several states also offer 529 prepaid tuition plans, which allow parents to purchase credits that cover the cost of tuition when their son or daughter eventually heads to college.

In contrast to traditional 529 accounts, prepaid plans are typically only valid for in-state tuition at public universities. Depending on where you invest, the state may allow you to transfer the contract to a school in another part of the country or a private institution, but you may not get the full value of your contract back in the process.

How Can You Open a 529 Plan?

You can buy college savings plans in one of two ways: by selecting a direct-sold plan on your own or opening an account through a financial advisor. While the latter might seem like a good option if you’re a novice investor, you’ll likely pay more in the process. Advisor-sold plans typically have higher fees, and there’s always a risk that less scrupulous professionals will steer you toward investments that pay them a fatter commission.

To open a 529 account yourself, simply visit the website for your preferred plan and start the enrollment. As part of the process, you’ll have to select which investment options your funds will go toward. Some states require a minimum initial investment, which can range from $15 to $1,000 for in-state residents.

What Are the Tax Benefits of 529 Plans?

When used for qualified expenses—a category that includes tuition, certain room-and-board fees, required textbooks, and computers—students can withdraw money from a 529 plan tax free.

In addition, some states offer income tax deductions for residents who contribute to their plan. A few “parity” states extend those tax benefits even if you pick a 529 plan from another state.

What Happens If You Don’t Use Your 529 Plan?

If your son or daughter ends up not going to college—or is fortunate enough to get a large scholarship—you can transfer the account to another child or save it for a grandchild. You can also use the money to fund your own education, should you decide to go back to school. There’s also the option of withdrawing funds and using them for noneducational purposes, but there’s a big downside: You’ll likely have to pay income taxes and a 10% penalty on earnings.

Can You Use a 529 Plan for Multiple Children?

Yes, sort of. At any given time you can only have one beneficiary for each account. That means you can only take distributions for that child.

However, if you have more than one child and only want to set up one account, you can always change the beneficiary to a qualified family member at a later date. Any unused balance could then be withdrawn by the new (presumably younger) sibling for eligible education expenses.

Alternatively, you can set up a separate account for each child. If you end up with an unused balance in any of the accounts, you can switch the beneficiary to another child or grandchild—or use it for your own education expenses.

Which 529 Plans Are Available in Your State?

With the exception of Wyoming, every state (and the District of Columbia) operates at least one 529 savings plan. Here is a list of direct-sold plans by state, along with the annual expense ratio that they charge account holders.

Direct-Sold 529 Plans by State
State Plan Name Expense Ratio
Alabama CollegeCounts 529 0.27% to 0.88%
Alaska The University of Alaska Savings Plan 0.28% to 0.70%
Alaska T. Rowe Price College Savings Plan 0.35% to 0.70%
Arizona College Savings Bank Plan (CDs or savings account) N/A
Arizona Fidelity Arizona College Savings Plan 0.05% to 0.99%
Arizona Ivy InvestEd 529 Plan 0.51% to 1.37%
Arkansas The GIFT College Investing Plan 0.39% to 0.53%
California ScholarShare 529 College Savings Plan 0.00% to 0.57%
Colorado CollegeInvest Direct Portfolio College Savings Plan 0.34%
Colorado CollegeInvest Stable Value Plus College Savings Plan 0.71%
Colorado CollegeInvest Smart Choice College Savings Plan 0.34%
Connecticut Connecticut Higher Education Trust (CHET) 0.00% to 1.14%
Delaware Delaware College Investment Plan 0.05% to 0.99%
District of Columbia DC College Savings Plan 0.15% to 0.74%
Florida Florida 529 Savings Plan 0.00% to 0.75%
Georgia Georgia Path2College 529 Plan 0.00% to 0.32%
Hawaii HI529: Hawaii’s College Savings Program 0.58% to 0.66%
Idaho IDeal – Idaho College Savings Program 0.34% to 0.49%
Illinois Bright Start College Savings Program – Direct 0.17% to 0.65%
Indiana CollegeChoice 529 Direct Savings Plan 0.18% to 0.82%
Indiana CollegeChoice CD 529 Savings Plan N/A
Iowa College Savings Iowa 0.20%
Kansas Learning Quest 0.09% to 0.81%
Kansas Schwab 529 College Savings Plan 0.25% to 1.00%
Kentucky KY Saves 529 0.00% to 0.85%
Louisiana START Saving Program 0.00% to 1.75%
Maine NextGen 529 0.00% to 0.53%
Maryland Maryland 529 College Investment Plan 0.26% to 0.70%
Massachusetts U.Fund College Investing Plan 0.05% to 0.99%
Michigan Michigan Education Savings Program 0.00% to 0.24%
Minnesota Minnesota College Savings Plan 0.00% to 0.31%
Mississippi Mississippi Affordable College Savings 0.00% to 0.73%
Missouri MOST – Missouri’s 529 College Savings Plan 0.18% to 0.51%
Montana Achieve Montana 0.47% to 0.83%
Nebraska NEST 529 College Savings Plan 0.20% to 1.26%
Nebraska TD Ameritrade 529 College Savings Plan 0.48% to 1.45%
Nevada SSgA Upromise 529 Plan 0.29% to 0.89%
Nevada Vanguard 529 College Savings Plan 0.15% to 0.44%
Nevada USAA 529 College Savings Plan 0.52% to 1.08%
New Hampshire UNIQUE College Investing Plan 0.05% to 0.99%
New Jersey NJBEST 529 College Savings Plan 0.14% to 0.82%
New Mexico The Education Plan 0.29% to 0.71%
New York NY’s 529 College Savings Program – Direct Plan 0.13%
North Carolina College Foundation of North Carolina NC 529 Plan 0.25% to 0.38%
North Dakota College SAVE 529 Plan 0.55% to 0.85%
Ohio CollegeAdvantage, Ohio’s 529 Plan 0.00% to 0.54%
Oklahoma Oklahoma College Savings Plan 0.00% to 0.78%
Oregon Oregon College Savings Plan 0.00% to 0.70%
Pennsylvania Pennsylvania 529 Investment Plan 0.22% to 0.32%
Rhode Island CollegeBound Saver Program 0.04% to 0.60%
South Carolina Future Scholar 529 College Savings Plan 0.00% to 0.25%
South Dakota CollegeAccess 529 0.43% to 0.88%
Tennessee TNStars College Savings 529 Program 0.00% to 0.35%
Texas Texas College Savings Plan 0.57% to 0.98%
Utah my529 0.13% to 0.56%
Vermont Vermont Higher Education Investment Plan 0.00% to 0.39%
Virginia Invest529 0.10% to 0.69%
Washington DreamAhead College Investment Plan 0.28% to 0.40%
West Virginia SMART529 Select 0.12% to 0.22%
Wisconsin Edvest 0.00% to 0.41%
Wyoming (does not operate a 529 plan) N/A
The expense ratio denotes the range of annual expenses for underlying funds in the plan.

Source: Vanguard

Can You Withdraw Funds for Noneducational Needs?

In order to take advantage of the tax benefits afforded to a 529 plan, you generally have to use the funds for qualified educational expenses, whether it’s for college or a private K-12 school. Otherwise, the account holder could be hit with income taxes and a 10% penalty on any earnings.

However, there are some additional ways to spend 529 funds without incurring a penalty. For example, plan holders can roll over money from a 529 plan to an ABLE account for the same beneficiary. ABLE accounts are aimed at individuals who are significantly disabled before the age of 26.

Also, the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was signed into law in December 2019, allows plan holders to withdraw a lifetime maximum of $10,000 for qualified student debt of the beneficiary. It can also be used to pay certain expenses related to apprenticeship programs, such as tuition, fees, books, and equipment. These withdrawals can be made both tax and penalty-free.

The Bottom Line

You can use 529 funds to pay for college anywhere in the union. While there are certainly advantages to investing in your own state’s 529 plan—especially if yours offers an income tax break—it’s not the only place you can put your child’s college money. If another state offers better plan features or substantially lower fees than your state does, you might want to do some comparison shopping.

Methodology

Because they offer lower fees, our list focuses on direct-sold plans, of which virtually every state has at least one—Wyoming being the only exception. We favor plans with low expenses—both maintenance fees and management fees for the underlying funds—as well as a strong record of performance. We also weighed other factors, such as the number of investment options that the plan offers.

Fees and Expenses

Management fees are key, because these expenses chip away at your balance each year. By contrast, state tax breaks generally only offer you a benefit for the year in which you contribute those funds. The earlier you start investing, the more important a small difference in annual fees becomes in choosing a plan.

Fund expenses are especially important when comparing multiple 529 plans that invest in passive instruments such as index funds. Because the underlying stocks or bonds are largely the same between plans, the expense ratio becomes perhaps the biggest point of differentiation.

Returns

In choosing our top 529 plans, we also looked at investment returns over one-year and five-year time spans, using data from the website Savingforcollege.com. While past results don’t guarantee future performance, a consistent pattern of beating one’s peers indicates that the plan manager is choosing an effective menu of investments.

Selection

Our third factor was the breadth of each plan’s investment options. We gave higher marks to plans that offered greater choice, such as including age-based portfolios and individual funds for parents who like taking the reins.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy .
  1. Internal Revenue Service. "Publication 970." Accessed Jul. 8, 2020.

  2. CollegeAdvantage (Ohio 529). "Does A 529 Plan Affect Financial Aid?" Accessed July 7, 2020.

  3. USNews. "4 Reasons to Consider Purchasing Another State's 529 Plan." Accessed Jul. 8, 2020.

  4. Savingforcollege.com. "How much is your state’s 529 plan tax deduction really worth?" Accessed July 6, 2020.

  5. Savingforcollege.com. "Q1 2020 529 plan rankings: Ten-year performance." Accessed July 6, 2020.

  6. Vanguard. "Compare 529 college savings plans." Accessed July 6, 2020.

  7. my529. "my529 Earns Morningstar Gold." Accessed Jul. 8, 2020.

  8. my529. "Program Description." Accessed Jul. 8, 2020.

  9. Savingforcollege.com. "my529." Accessed July 6, 2020.

  10. Savingforcollege.com. "Bright Start Direct-Sold College Savings Program." Accessed July 6, 2020.

  11. Morningstar. "Rating the Top 529 College Savings Plans." Accessed July 6, 2020.

  12. Savingforcollege.org. "Ratings for all 529 College Savings Plans." Accessed Jul. 8, 2020.

  13. Virginia529. "Basics." Accessed Jul. 8, 2020.

  14. NY Saves. "FAQs: Getting started." Accessed July 6, 2020.

  15. Savingforcollege.com. "New York’s 529 College Savings Program -- Direct Plan." Accessed July 6, 2020.

  16. Savingforcollege.com. "Are 529 plans only for my state's public colleges?" Accessed July 8, 2020.

  17. Savingforcollege.org. "Minimum Contributions." Accessed Jul. 8, 2020.

  18. Fidelity. "How to spend from a 529 college plan." Accessed July 6, 2020.

  19. Savingforcollege.org. "How to Change the Beneficiary on Your 529 Plan." Accessed Jul. 8, 2020.

  20. Merrill Edge. "Can you transfer or roll over a 529 account?" Accessed July 6, 2020.

  21. Internal Revenue Service. "Tax reform affects ABLE accounts, saver’s credit, 529 rollovers." Accessed Jul. 8, 2020.

  22. U.S. Congress. "H.R. 1994." Accessed Jul. 8, 2020.