It’s never too early to start saving for your kids’ college education, and 529 plans are designed to help you do just that.
A 529 plan is a state-sponsored tax-advantaged investment program that allows you to stash money away for the future college costs of your child, your grandchild, or any designated beneficiary. Savings and earnings from a 529 plan can be used at almost any public or private accredited U.S. college or university, and you can participate in any state’s 529 plan, regardless of where you live.
But before you start investing your money, you’ll want to shop around for the right plan. The Wall Street Journal offers five suggestions to help you find the best 529 college savings plan that works for you:
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Look at plans from every angle
Consider costs, investment options, and asset-allocation strategies.
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Weigh your in-state vs. out-of-state options
Weigh any tax advantages of investing in an in-state plan against the plan’s total costs.
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Find plans with minimal fees
Look for annual asset-based fees of less than 1 percent for direct plans and less than about 1.3 percent for brokered plans.
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Do your research
Compare 529 plans at CollegeSavings.org, SavingforCollege.com, or Morningstar.com.
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Zero in on the best deals
Get a heads-up on the year’s best and worst 529 plans with the annual list from investment researcher Morningstar, Inc.