What's the 411 on 529s?

February 2, 2006 8:54 AM

I'm looking to setup some 529 plans for my young kids to save for college. My state's plan doesn't have any extra tax benefits so I'm looking elsewhere. Jane Bryant Quinn likes Utah's plan because the costs are low. I've been using savingforcollege.com for information, but there are a lot of choices, and I'm not sure of all the ramifications of each. I'm looking for any thoughts regarding 529s and the States with the best plans. I'm from Massachusetts.
posted by GernBlandston to Education (5 answers total)

A lot of 529s have high fees and mediocre returns, so that's something to watch. I like US Savings Bonds - tax-free income when used to pay education tuition and expenses.
posted by meehawl at 9:59 AM on February 2, 2006

I am using the 529 based in Virginia that is administered by American Funds (though I live in Indiana). I am not sure about the fees, but the returns are good 8-9%. On par with most 401k's.
posted by internal at 10:18 AM on February 2, 2006

You should be able to use any state's 529 plan (although there may be tax implications or restrictions in some). You should look for a plan that offers a wide range of mutual funds to choose from and try and spread your risk across several funds. My recommendation is to generally avoid insurance companies or banks for investments.
posted by Psharden at 11:38 AM on February 2, 2006

This doesn't answer your query directly, but another way you could save for your kids college education is through Upromise, a coalition loyalty program that allows you to save money while you shop for the everyday things you need. (I don't work for the program, but I know of them through my research at work.) You just register your credit cards or store loyalty cards of participating companies and start saving--I believe it's the companies who participate in the program that contribute the funds in this savings account. The bonus to this program is that your family and friends can also help you save by shopping once they're registered and what's even better is that if you're already earning points in a different program, for eg. frequent flyer points on your credit card, you continue to earn those points.

They also offer a product called Upromise College Fund that qualifies as a 529, so you might want to look into that as an option. I'm not familiar with US state/tax laws though, so I don't know what the tax implications are. Hope this helps.
posted by phoenixc at 4:12 PM on February 2, 2006

When I went looking last year I found many people recommended the Utah 529. A key advantage is many of their investment options are really just Vanguard funds. Vanguard's the best mutual fund company in the US because of it's straightforward investment policies and very very low fees. So I signed up for UESP. So far I've been quite happy with their service and administration.
posted by Nelson at 5:51 PM on February 2, 2006 [1 favorite]