On April 16, investment researcher Morningstar, Inc. released its annual list of the five best and five worst 529 college savings plans for 2008.
A 529 plan is a state-sponsored tax-advantaged investment program that allows you to save for the future college costs of a designated beneficiary, such as your child or grandchild. Savings and earnings from a 529 plan can be used at almost any accredited U.S. college or university, public or private, and even at some foreign schools.
There’s no federal tax deduction for your contributions to a 529 plan, but any returns you earn are tax-free. You can also withdraw money from your 529 without a federal or state tax penalty, as long as the money goes toward qualified higher-education expenses.
You can invest in any state’s 529 plan, regardless of where you live, but you may get additional tax breaks if you invest in your home-state plan.
The Top 5 Plans
The 5 Worst Plans