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Best 529 College Savings Plans for 2024

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Updated May 8, 2024

When you're ready to start saving for college, a 529 plan is one option to consider. It allows you to set aside money for future education expenses on a tax-advantaged basis. Contributions grow tax-deferred, and withdrawals are tax-free when used for qualified education expenses.

All 50 states offer at least one 529 savings plan, but which one is right for you? Here's a closer look at the best 529 college savings plan options.

Best 529 plans compared

InstitutionIn-State tax benefitMinimum opening balanceMaximum overall contributionFees and expensesUnderlying fundsPortfolio options
Bright Start College Savings (Illinois)
Tax deduction of up to $20,000 for married couples filing jointly or $10,000 for single filers
None
$500,000 per beneficiary
$0 annual account fee; 0.07% program management fee; 0.025% state fee; Expense ratios vary by fund
Vanguard, Dimensional Fund Advisors, T. Rowe Price, Dodge & Cox Funds
Age-based, Target, Individual fund
CollegeAdvantage (Ohio)
Tax deduction of up to $4,000 per child per year
$25
$523,000
0.095% record-keeping fee; 0.02% OTTA fee; 0.01% accounting and admin fee; Expense ratios vary by fund
Vanguard, Dimensional Fund Advisors
Age-based, Target, Individual fund
New York's 529 College Savings Program
Tax deduction of up to $10,000 per year for married couples filing jointly; up to $5,000 for single filers
None
$520,000
0.12% management fee; $0 advisor fees, commission fees, or annual fees; Expense ratios vary by fund.
Vanguard
Target enrollment, Individual portfolios
Michigan Education Savings Program (MESP)
Tax deduction of up to $10,000 per year for married couples filing jointly; up to $5,000 for single filers
$25
$500,000
0.02% program manager fee; 0.025% state administrative fee; Expense ratios vary by fund.
TIAA-Cref
Enrollment year, Multi-fund, Single-fund; Guaranteed investment;
my529 (Utah)
4.65% income tax credit
None
$560,000
0.10% to 0.14% administrative fee; Expense ratios vary by fund.
Vanguard, Dimensional Fund Advisors, PIMCO
Target, Age-based, Static

Our recommendations

Bright Start College Savings (Illinois)

Why we picked it: The Illinois Bright Start College Savings plan offers a generous tax incentive for residents and higher lifetime contribution limits. State residency is not required to contribute, and there's no minimum opening deposit. Anyone can contribute, including parents, grandparents, and other family members.

You can make up to $500,000 in lifetime contributions per beneficiary, and there's no age requirement for making withdrawals. Married couples filing jointly can deduct up to $20,000 in contributions yearly, with a $10,000 deduction limit for single filers. The deduction applies to original contributions and rollover contributions from other plans.

Bright Start's investment options revolve around three types of portfolios: age-based, target date, and individual funds. Depending on your goals, time frame for investing, and individual risk tolerance, you can choose from an aggressive, moderate, or conservative asset allocation.

Bright Start incorporates low-cost index funds into its portfolios and charges no annual or up-front enrollment fees.

Pros:

  • A $500,000 lifetime contribution limit.
  • Generous state income tax deduction.
  • Multiple portfolios and investment options.

Cons:

  • Tax deduction is limited to state residents only.
  • Some funds have higher expense ratios than others.

How to get started: You can open a Bright Start account online or complete the paperwork and mail it in. If you'd like to open a 529 account online, you'll need to share the following:

  • Your name, address, date of birth, and Social Security number.
  • Name, address, date of birth, and Social Security number of your beneficiary.
  • Bank account number and routing number.

You'll also need to tell Bright Start what you want to invest in. When completing the application, you'll have the option to set up automatic contributions and choose a successor account owner.


CollegeAdvantage (Ohio)

Why we picked it: Ohio CollegeAdvantage is open to anyone age 18 or older who wants to make tax-advantaged contributions to college savings. There's a state income tax deduction of up to $4,000 per child per year, and there are no restrictions on how many accounts you can open for different beneficiaries.

The lifetime contribution limit is well above what many other states offer, allowing you to contribute a significant amount toward your student's education. Similar to some of the other best 529 college savings plans, investment options include:

  • Age-based portfolios.
  • Target portfolios.
  • Individual fund portfolios.

CollegeAdvantage leans heavily on Vanguard funds, which have a reputation for being exceptionally inexpensive. You can also choose from individual fund options, including bond-focused and equity-focused portfolios.

Pros:

  • High lifetime contribution limit.
  • Portfolio and fund options to fit every risk tolerance.
  • Open to residents and nonresidents.

Cons:

  • Tax deduction is smaller than other plans.
  • The administrative fee is slightly higher than other plans.

How to get started: You can open an Ohio CollegeAdvantage savings plan online. There's an opening deposit requirement, but at $25, it's relatively low.

If you'd rather complete the application process offline, you can request a CollegeAdvantage Kit that includes everything you'll need to evaluate the plan and open your account.


New York's 529 College Savings Program

Why we picked it: New York's 529 College Savings Program is a great option for people who prefer Vanguard funds to other mutual funds or exchange-traded funds (ETFs). There's no minimum deposit required to open an account, no age or income restriction, and no state residency requirement.

The current tax deduction for contributions maxes out at $10,000 for married couples filing jointly and $5,000 for single filers. You don't have to be a state resident, either; the deduction extends to people who work in New York and pay taxes in the state but live elsewhere.

You can make origination contributions to the plan, rollover funds from another 529, or contribute proceeds from the sale of U.S. savings bonds or assets in a Coverdell ESA. Plan costs are low, and the lifetime maximum contribution limit is well above what you'll find with other 529 plans.

Pros:

  • Higher lifetime contribution limit.
  • Exceptionally low fees.
  • The state tax deduction is better than what you'll find with other plans.

Cons:

  • May not appeal to savers looking for options beyond Vanguard.
  • Not everyone will qualify for the deduction.

How to get started: You can open a New York 529 college savings plan online, and there's no minimum deposit requirement. All you'll need to do is gather personal information for yourself and your student and make your investment selections. If you're unsure whether this plan might be right for you, you can participate in a free webinar to learn more about how it works.


Michigan Education Savings Program (MESP)

Why we picked it: The Michigan Education Savings Program (MESP) offers state residents tax benefits and a higher lifetime contribution limit. Currently, married couples filing a joint return can claim a deduction of up to $10,000 per year, and single filers can deduct up to $5,000 in contributions.

MESP is administered by TIAA-CREF and offers a variety of funds and multiple portfolio options. Overall, the fees are among the lowest of any 529 college savings plan. A $25 minimum deposit is required, but you can decide how much to contribute going forward through either manual or automatic contributions.

You don't need to be a state resident to contribute, though you must live and pay taxes in Michigan to claim the tax deduction. MESP allows other people to make contributions to plans on behalf of a named beneficiary, which is great if you'd like to get the entire family involved in saving for college.

Pros:

  • State residency is not required to contribute.
  • Low fees, with no account opening fees.
  • Access to multiple college planning tools.

Cons:

  • No tax deduction benefit for nonresidents.
  • Limited to TIAA-CREF funds.

How to get started: You can open an MESP account online using your and your beneficiary’s personal information. You'll be able to link your bank account using your routing number and account numbers to make the $25 minimum deposit. If you prefer to read through the paperwork in more detail before opening an account, you can download it, fill it out, and mail it in.


my529 (Utah)

Why we picked it: The Utah my529 Plan is unusual in that eligible savers can take advantage of a tax credit rather than a tax deduction. Tax credits reduce your tax liability on a dollar-for-dollar basis, while tax deductions lower your taxable income for the year. You'll need to be a Utah taxpayer to claim the credit.

There are numerous investment options from which to choose, with underlying funds from Vanguard, Dimensional Fund Advisors, and PIMCO. Anyone can open and contribute to a my529 account, and there's no minimum contribution requirement.

The plan has some of the lowest fees of any 529 plan option, with my529 charging a flat asset administrative fee only. Expense ratios vary by fund, but the plan incorporates a number of low-cost options.

Pros:

  • Open to residents of other states besides Utah.
  • Wide variety of funds and portfolios from which to choose.
  • Low fees.

Cons:

  • A tax credit may provide less value than a deduction.
  • Tax benefits don't extend to nonresidents.

How to get started: You can open a my529 college savings account online with any amount. When you complete the account setup, you'll be asked for your personal information and details about your beneficiary. You'll also need to tell my529 how you'd like to invest initially, though you can change your investment selections twice a year.


Methodology

We analyzed 529 college savings plans nationwide using a number of metrics, including in-state tax breaks, minimum and maximum contribution limits, and portfolio selection. We also considered the fees and expenses associated with each plan, as well as the eligibility requirements for making contributions.

The final plans selected represent the best options overall for 529 college savings based on the range of investments offered, cost, contribution limits, and availability.

Alternatives to 529 plans to save for college

A 529 plan is just one way to prepare for higher education costs. If you're looking for some alternatives, you might consider these possibilities instead.

Coverdell Education Savings Account (ESA)

A Coverdell Education Savings Account (ESA) is another tax-advantaged college savings option. With this account, you can save up to $2,000 per year on behalf of your student(s) until they turn 18. Withdrawals are tax-free when used for eligible education expenses, but there's a catch.

All money in a Coverdell ESA must be withdrawn by the student's 30th birthday. Any remaining funds are subject to a steep tax penalty.

Roth IRA

A Roth IRA is a tax-advantaged account designed to help you build wealth for the future. You can contribute after-tax dollars up to the annual contribution limit, which you can withdraw tax-free once you reach age 59½. Early withdrawals are subject to a 10% tax penalty.

The Internal Revenue Service (IRS) allows some exceptions to this rule. One is waiving the early withdrawal penalty when you use early distributions to pay for qualified higher education expenses.

Using a Roth IRA to pay for college may negate the need to take out student loans. However, taking money from your retirement fund means it won't have a chance to benefit from the power of compounding interest over the long term.

If you're interested in opening a Roth IRA, consider Robinhood. You can open your account online in minutes and contribute new money or rollover funds from an existing IRA or 401(k). Robinhood offers a 1% match for every dollar you deposit from any account.

Brokerage account

Brokerage accounts allow you to buy and sell securities without the annual contribution limit restrictions of IRAs. Depending on the type of brokerage account you have, you might be able to trade:

  • Stocks.
  • Bonds.
  • Mutual funds.
  • ETFs.
  • Cryptocurrency.
  • Futures.
  • Options.

A brokerage account might be a good option if you believe you can get better returns with your personal investment strategy. Keep in mind, however, that when it's time to sell your investments, capital gains tax may apply if you're turning a profit.

When comparing brokerage accounts, look for one that offers the best combination of variety and low fees. Public, for example, offers everything from stocks to Treasuries to crypto, and you can build a portfolio that matches your risk tolerance and goals. You also have the option to keep your uninvested funds in a high-yield cash account until you're ready to use them.

Life insurance

A life insurance policy can help you prepare for the unexpected, but it may also be a useful tool for college planning. Life insurance can be used to pay for college expenses in one of two ways.

  • Death benefits from a term life policy can help pay higher education costs should the person covered by the policy pass away.
  • Cash value accumulation in a permanent life insurance policy can be withdrawn or borrowed against.

Term life is usually the more affordable of the two, and it may make the most sense if you know you'll only need coverage for a certain period.

When considering term life insurance, it's helpful to shop around and compare rates based on the type of policy you plan to buy, the coverage amount, and your overall health. With Ethos, you can get a life insurance quote online and be covered in minutes with no medical exam or blood tests required. Getting up to $2 million in coverage for as little as $2 per day is possible.

More on 529 plans

If you're unfamiliar with how 529 plans work, it helps to understand the basics. If you're considering opening a college savings account, here are additional things to know.

What is a 529 plan?

A 529 plan is a tax-advantaged account designed for college savings. When you open a 529 account, you can contribute to the plan, and the balance grows tax-deferred. You can then withdraw those funds to pay for qualified higher education expenses. Withdrawals are always tax-free when used for education expenses.

A 529 plan is not a bank account, though you might be able to open one through a bank. It's not a retirement account either; 529 accounts are specifically intended only to help pay for school. However, your investment options may include mutual funds or ETFs, which you can also own in an IRA.

How does a 529 plan work?

College savings plans allow you to make contributions at your own pace, invest them, and earn interest on a tax-deferred basis. When it's time to pay college expenses, you can withdraw your original contributions and earnings tax-free.

A college 529 savings plan can be used to cover any or all of the following:

  • Tuition and fees.
  • Room and board.
  • Books.
  • Equipment and supplies.
  • Student loan debt (up to $10,000 lifetime).
  • Off-campus housing.
  • Computers and computer software.
  • Internet service.
  • Special-needs expenses.

The Tax Cuts and Jobs Act expanded the list of eligible educational institutions by allowing parents to withdraw money to pay for public, private, or parochial tuition at elementary and secondary schools. These withdrawals are tax-free, though there is a $10,000 annual limit on how much you can take out.

529 Plan Pros and cons

Pros:

  • Contributions grow tax deferred and some states offer a tax deduction
  • Qualified distributions for education expenses are tax-free
  • Funds can be used for college, elementary, and secondary school expenses
  • Some plans allow generous lifetime contribution limits
  • Plans can be transferred to another beneficiary if necessary

Cons:

  • Some states may restrict who can contribute
  • Nonqualified distributions are subject to ordinary income tax
  • Some plans may carry higher expenses
  • Portfolio options may be limited
  • There may be limits on how often you can change your investment selection

529 plans by state

All 50 states have at least one 529 college savings plan, though they aren't all alike. The biggest differences among college savings plans typically include:

  • Who can contribute.
  • Minimum and maximum contribution limits.
  • State tax benefits.
  • Portfolio selection.
  • Expenses and fees.

If you're looking for a 529 plan to save for college, your state's plan is usually the best place to start. You can compare the features and fees of your state's plan as a starting point for deciding what you need most from a 529 account.

Remember that some states may allow anyone to contribute to their 529 plan, while others may restrict contributions to residents. Also, while some states offer a tax benefit for 529 contributions, they're not required to do so, and there's currently no federal tax deduction or tax credit for 529 contributions.

529 plan rules

The main rules regarding 529 plans center on how you can use the money and when you can withdraw it. Here's a quick recap of the IRS guidelines regarding 529 plans.

  • Contributions grow tax-deferred, with lifetime contribution limits determined by the plan sponsor.
  • Withdrawals are tax-free for qualified education expenses; otherwise, they are taxable distributions.
  • You are not required to invest in your state's plan, but your contributions to other states' plans may be limited.
  • States can offer a tax deduction or credit, but they are not required to do so.
  • The account holder maintains ownership of the funds and may change the beneficiary at any time.

There's one more rule to know regarding 529 plans and the gift tax, which applies when you make financial gifts to someone else that exceed the annual exclusion limit. For 2024 that limit is $18,000 per person, doubling to $36,000 for married couples filing a joint return.

This means that if you have five kids, you could contribute up to $18,000 for each of them to a 529 plan without triggering the gift tax. If you're married and file a joint return, you could contribute up to $36,000 per student without owing gift tax. The gift tax exclusion limit is periodically adjusted for inflation.

How do I open a 529 plan?

It's possible to open a 529 plan online. First, you must decide on the plan to which you want to contribute and then complete the application process.

When you open a 529 plan, you must provide identifying information about yourself as the account owner and the person you'd like to name as the beneficiary. Typically, this would be your child, but you could open a 529 on behalf of:

  • Your spouse.
  • Yourself.
  • A grandchild.
  • A younger sibling.
  • Cousins or other family members.
  • Anyone you want to help with saving for college.

You also need to choose your investments when you open your account. The options offered will depend on the plan, but it's not unusual for 529 portfolios to be built around target-date funds. These mutual funds adjust their allocation based on your student's expected college enrollment date.

Once your plan is open, you can decide how often and in what amount to contribute. You can set up recurring deposits each month, or you can choose to make contributions at your own pace. Just remember to keep the annual gift tax limits in mind.

TIME Stamp: 529 college savings plans can help you get a handle on education expenses

No one is required to open a 529 college savings plan to pay for school, but there are some compelling reasons to consider doing so. Researching the best 529 college plans by state can give you a better idea of which one is most likely to help you further your savings goals.

Frequently asked questions (FAQs)

Can you lose money in a 529 plan?

If you're investing in a 529 college savings plan, you could lose money if your investments decline in value. This is the risk associated with investing. Building a balanced, diversified portfolio can help you manage risk and minimize the chances of losing money in a 529 plan.

How do 529 plans work with multiple kids?

If you have multiple children, you can set up a 529 college savings plan for each of them. You'd be the account owner for each plan, with each child listed as the beneficiary of the account intended for their use. Alternatively, you could set up one 529 plan and change the beneficiary from one child to another should one of them decide not to go to college.

What happens to a 529 plan if it's not used?

If you don't withdraw money from a 529 plan, it doesn't go anywhere. You can take it out once you need it to pay for your student's expenses or transfer it to another beneficiary. It would be treated as a taxable distribution if you decide to withdraw money for anything other than qualified higher education expenses.

The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.

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