Most states offer a 529 Savings Plan.
A 529 savings plan allow for saving for education, including college. It has tax advantages in that a person can contribute to the account and distributions won’t be taxed. They can have further tax benefits with some states.
But they aren’t all created equal.
Some have higher expense ratios than others, and if you purchase through a salesperson instead of purchasing directly, you likely will pay a fee (‘load’ fee) to compensate the salesperson for selling it to you.
Lowest Cost States
The 5 states that have the lowest cost 529 plans are:
California, Nevada, New York, Ohio, and Utah.
Before considering these though you want to find out if you get a tax deduction by purchasing the 529 plan sponsored by your own state.
However, simply because your state does have a 529 plan that is tax deductible doesn’t mean it’s still the best one for you: You still need to consider the expense ratios and you also need to consider the quality of the underlying funds in the plan.
While it can definitely be a smart decision to start a 529 plan, they are not all created equal in performance, expenses/fees, or tax considerations.
Next Step
Ready to take the next step and work with a fee-only CFP? Reach out to schedule a Discovery Meeting to learn more.