Which is the Best 529 College Savings Plan?

Which is the best 529 college savings plan is probably the most popular question when it comes to college savings or 529 plans. There are so many 529 college savings plans out there so it is hard to know which is the best is the best 529 college savings plan. Each state has at least one 529 college savings plan and each state would like to claim that their 529 college savings plans are the best of the bunch.

When looking through the list of 529 college savings plans, you should look at past performance of all the portfolios on each 529 college savings plan on the list. You may be surprised how your state 529 plans is the lowest performer of the group of all 529 college savings plans. Most people invest in the 529 college saving plan offered in their state because of more tax incentives.

However, your state 529 college savings plan may not be the best 529 college savings plan. While you save on some taxes, you may be losing the bulk of the money in the market. Below are tips of how to select which is the best 529 college savings plan.

How to select which is the best 529 college savings plan

If your state has more tax breaks on their state 529 plans (note that some states do not offer any better tax incentives than out of state 529 college savings plans), then you may want to invest in your state 529 college savings plan unless the expenses on the state 529 plan are excessively high or the state 529 savings plans have consistently underperform the market.

Next, you want to compare the tax incentives, expenses, and performance of all the 529 college savings plans offered by all states. You can obtain a list of all 529 state savings plans and compare them side by side.

You may want to consult a financial advisor to help you select the best 529 college savings plan for your situation. However, beware that most financial advisors work for firms that do not offer all 529 college savings plans from every state. That means, the financial advisor may have incentive to recommend the 529 college savings plan that he or she offers, rather than the best 529 college savings plan.