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For many parents out there, one of the biggest concerns is providing their children with a college education. We have done shows in the past about the benefits of 529 savings plans and, in today’s show, we revisit this topic and update you guys on the best plans of 2012.
There are many benefits of using a 529 plan to fund your child’s education. If the funds are used for qualified higher education expenses, the money you put in as well as your earnings are tax free at the time of withdrawal. In addition, many states offer tax breaks such as a tax deduction for residents who invest in their own state’s plan.
When it comes to choosing the right plan for your family, remember that you do not have to use your state’s plan or the plan for the state your child goes to college in. Back in 2009, Consumer Reports put out a study on the best and worst 529 plans. We were interested to see that many of the best plans from 2009 are at the top of Morningstar’s list of best plans for 2012. Out of the 64 plans rated this year, Morningstar gave four Negative ratings, 33 Neutral ratings, 19 Bronze, 4 Silver, and 4 Gold.
The factors considered in Morningstar’s Ratings Scale include:
Gold Medalist Plans:
Alaska’s T. Rowe Price College Savings Plan
Maryland’s College Investment Plan
Utah’s Educational Savings Plan
Nevada’s Vanguard 529 College Savings Plan
Silver Medalist Plans:
Arkansas’ iShares 529 Plan
Michigan’s Education Savings Program
Ohio’s CollegeAdvantage 529 Savings Plan
Virginia’s CollegeAmerica Plan
Notable Bronze Medalist Plans: (those that were included in the 2009 Consumer Reports list and are still considered great plans today)
Colorado’s CollegeInvest Direct Portfolio
Georgia’s Path2College 529 Plan
Iowa’s College Savings Iowa 529 Plan
Illinois’ Bright Start College Savings Plan
Notable “Bad Plans”: (those that have consistently been rated poorly)
Kansas’ Schwab 529 College Savings Plan
Minnesota’s College Savings Plan
Rhode Island’s CollegeBoundfund Plan
Of course, we could not do a show about 529 plans without giving a shout out to Upromise.com. If you have children, we highly recommend this incredible tool for building their college savings while shopping online.
Please leave any questions or comments below or on our Facebook wall. Hope you all have a safe and Happy Halloween!
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