The federal government allows tax sheltered education funding accounts to exist as long as the funds go to pay for higher education. These accounts, called 529 savings plan accounts, are available in every state. However, each operate slightly different, some with more benefits than others. Comparing them to each other brings out the differences.
One State Plan Versus Another
All 50 states have a state 529 plan established consistent with federal laws. Immediate factors potential investors should review include each plan's performance, costs and rules for participation. Further, account management flexibility varies on changing beneficiaries, method of withdrawal and customer service.
Don't Reinvent the Wheel
A number of websites already exist on the Internet that compare each state's 529 plan and its detail. In addition, these websites update their information regularly as a state may change operating details. With a computer and a few queries on a search engine, a parent or investor can obtain extensive detail on multiple plans.
Fee information helps weed out bad plans. Fees take away from investment growth so the less fees, the better. Next, the variety of investments available helps screening. Some plans provide extensive choices while others just have a handful of mutual funds. Take advantage of tax benefits as well if your state plan offers such credits for 529 investing.
- education equals earning potential image by Jan Beltz from Fotolia.com