Get Your Teen Weekly Newsletter in your inbox! Sign Up
YourTeenMag Logo

3 Steps to Help You Choose the Best 529 Plan for Your Family

You’re ready to take the plunge and start saving for college with a 529 plan—a tuition savings account that offers tax advantages. But did you know that you don’t have to choose the one in your own state? With different 529 plans available in all 50 states, it makes sense to evaluate your options. What’s the best 529 plan for you?

The Best College Fund 529 Plan

Here’s how to go about it.

Step 1: Start with Your Home State

There’s no rule saying you must invest in your home state’s 529 plan, but the majority of states offer their residents tax incentives for doing so.

[adrotate banner=”36″]“More than 30 states offer a tax credit or deduction for contributions to a 529 plan,” explains Kathryn Flynn of Incentives vary by state. In Ohio, for instance, it’s a deduction of up to $4,000 a year on your state income taxes starting in 2018.

Just go online and search “529 plan” and your state’s name—or use a site like, which aggregates information about every 529 plan available. Once you get the details for your state’s plan, read them over. But don’t jump in yet. Next, it’s time to see how your state’s plan stacks up.

“The benefit of a tax deduction or credit may be outweighed by a plan’s less-than-stellar performance,” notes Flynn.

Step 2: Evaluating Different 529 Plans

Here’s what you’ll want to look for when evaluating plans side by side. If you’ve done any retirement planning, these criteria will be familiar to you.

Past performance:

[adrotate banner=”48″]While past performance can’t tell you how the 529 plan will fare in the future, it is an indicator of how well a fund has been managed.

[adrotate banner=”213″]

“Look closely at performance over the long term,” recommends Timothy Gorrell, executive director of the Ohio Tuition Trust Authority, which manages Ohio’s 529 plan, CollegeAdvantage. How the fund did last year is helpful, but how the fund has performed over a longer period—or since its inception—matters more.


Gorrell also recommends that families pay attention to the investment firm managing the fund. While states operate these funds, they tend to partner with investment firms—like Vanguard, Fidelity, and Blackrock—to handle the day-to-day management of the 529. Just as you would in selecting an IRA, you’ll want to make sure your 529 will be managed by a firm with an excellent reputation.

Fees and expenses:

As with any other investment, “fees and expenses can eat away at your gains,” says Flynn. Compare plans side by side to make sure you’re not getting soaked.

Investment options:

Flynn also recommends making sure you’re comfortable with the fund’s investment options. Again, like IRAs, 529 funds typically offer different types of investment portfolios— from more conservative to more aggressive—for families to invest in. “Most also offer age-based options where you can pick your investment portfolio based on your child’s age,” she says.

“Early on you can be more aggressive, but as you get closer to the time you’ll want to use these funds, you will want to get more conservative,” explains OTTA’s Gorrell. “The age-based plans are ready-made to follow that glide path.”

Ease of use.

How easy is it for you or your relatives to contribute to the plan? How easy is it to access the money when you’re ready to use it? And, most importantly, can you afford the required minimum contributions?

“That is certainly a priority for us,” notes Gorrell. “We have kept the initial minimum and ongoing contributions low. Our hope is that even if investors start modestly, they will see what a small contribution does and be encouraged to do more.”

Ohio’s 529 plan, CollegeAdvantage, also provides a portal where friends and family can easily contribute and qualify for their own Ohio tax deduction.


It’s helpful to look at ratings, just as you might for the funds you pick for an IRA. Using a website like can help you compare 529 plans based on the criteria that matter most to you.

Step 3: Checking In

Last, but hardly least, once you select a plan and start to invest, you’ll want to check in from time to time to make sure the fund continues to perform to your expectations. With a little luck and a lot of due diligence, you’ll be ready to write that first tuition check when the time comes!

Note: The recommendations in this article are for direct-sold 529 plans. If you work with a financial advisor, you can ask your advisor to recommend an advisor-sold 529 plan.

Diana Simeon is an editorial consultant for Your Teen.

Related Articles