Best 529 College Savings Plans By State

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A 529 savings plan gives you a tax-free way to invest for your child’s education.

But what are the best 529 plans by state? And how does money expert Clark Howard evaluate the best 529 plans? Keep reading to find out.


Table of Contents


What Is a 529 Plan?

A 529 plan is a tax-free savings plan to help pay for education.

Investment gains within these plans are tax-deferred like a 401(k). But withdrawals are tax-free for qualified education expenses.

Your 529 funds can be used to pay for post-secondary education, K-12 (up to $10,000 each year) and even apprenticeship programs. However, Clark says the real advantage of 529 plans is longer term, tax-free growth and spending.


How Do 529 Plans Work?

Each state has its own rules pertaining to its 529 plan(s).

All states limit the total amount you can contribute to a 529 plan.

Some states allow the person funding the 529 plan to get a state income tax deduction.

You aren’t restricted to investing in your home state’s plan. Only a few state plans include residency requirements.


Important Factors To Consider Before You Invest in a 529 Plan

1. Prioritize Saving for Your Own Retirement First

Statistics indicate that parents often struggle with guilt when faced with the choice to save for their own retirement or pay for something for their children, such as education.

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Clark says that you should always prioritize saving for your retirement first. Contribute to a 529 plan for a child only once you’re on track with your own retirement plan.

“Wanting to save for your kids’ education is great, [but] you shouldn’t save a penny for education unless you are already saving the maximum you can for your own retirement,” Clark says.

2. Stick to Age-Based Options

An age-based portfolio is the 529 plan version of a target date retirement fund, Clark’s most frequent investment recommendation. It’s a true “set it and forget it” investment choice.

These plans adjust your investment portfolio to a more conservative mix as your child gets closer to college age. Your child will be heavily invested in stocks at three years old, for example. The fund manager will automatically adjust the portfolio over time to include less stocks and more bonds.

3. Invest Only In Direct-Sold 529 Plans

Some states offer both “direct sold” 529 plans and commission-based 529 plans. The latter involves paying fees to a third-party broker in order to buy into a plan. Since direct-sold 529 plans exist, commission-based plans are a great way to waste money.


Clark Howard: Here Are the Best 529 Plans in the Country

If you’re the type of person who struggles picking off of the huge menu at The Cheesecake Factory, purchasing a 529 plan from the sea of options can be confusing.

Forty-nine states (and Washington, D.C.) sponsor 529 plans. Some of those states have multiple plans. And each plan offers a large array of investment options.

We’ve gone through every plan and categorized them by tier based on fees and expenses.

  • Dean’s List: 529 plans with annual fees less than 0.20%
  • Honor Roll: 529 plans with annual fees less than 0.40%
  • Teacher’s Pets: These plans missed the Honor Roll cut by a small margin. But they offer state tax benefits that offset some of the difference in fees.
  • Needs Improvement: Avoid the 529 plans in these states, which charge more than 0.40% in annual expenses and don’t qualify for a Teacher’s Pet distinction.

Clark strongly advises that you invest only in the exact state plan and investment choice that he specifies in these lists below. Otherwise, he says, you could end up in a “stinker of a plan.”

This list has changed dramatically in the last few years due to cost-cutting, competition and a higher volume of money in these plans, which is great for consumers.

However, the difference between paying 0.15% and 0.50% in annual fees over the course of a decade-plus on potentially tens of thousands of investment dollars can be substantial. So it’s important to shop carefully.

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Keep in mind that most plans are available to everyone, regardless of where in the United States you live.

Dean’s List

There are 18 different states with the entire range of passively-managed, age-based options sitting below 0.20% in annual costs. That illustrates just how competitive 529 plans have become.

StatePlan NameClark's Investment ChoiceState Tax Benefits
ArizonaFidelity Arizona College Savings PlanAge-based index onlyAny 529 plan
CaliforniaScholarShare 529"Enrollment Portfolio Passive" only (age-based equivalent)None
ConnecticutConnecticut Higher Education Trust (CHET)Fidelity Index Portfolios only (age-based)In-state only
DelawareDelaware College Investment PlanFidelity Index Portfolios only (age-based)None
FloridaFlorida 529 Savings PlanAge-based onlyNone
GeorgiaPath2College 529 Plan"Enrollment Portfolio" only (age-based equivalent)In-state only
IllinoisBright Start 529 PlanIndex age-based onlyIn-state only
IowaCollege Savings Iowa 529 PlanAge-based onlyIn-state only
Louisiana*START (Student Tuition Assistance & Revenue Trust)Age-based onlyIn-state only
MassachussettsU.Fund College Investing PlanIndex age-based onlyIn-state only
MichiganMichigan Education Savings Program (MESP)Age-based onlyIn-state only
MinnesotaMN Saves: Minnesota 529 College Savings PlanAge-based onlyAny 529 plan
NevadaVanguard 529 College Savings Plan"Target Enrollment Portfolio" only (age-based equivalent)None
New HampshireUNIQUE College Investing PlanIndex aged-based onlyNone
New MexicoThe Education PlanAge-based onlyAny 529 plan
New YorkNew York's 529 College Savings PlanAge-based onlyIn-state only
South Carolina*Future Scholar 529 College Savings PlanAge-based onlyIn-state only
Utahmy529Age-based onlyIn-state only

*Available only to in-state residents.

Honor Roll

Some of these states barely missed the Dean’s List cutoff.

StatePlan NameClark's Investment ChoiceState Tax Benefits
AlabamaCollegeCounts 529 FundAge-based onlyIn-state only
ColoradoCollegeInvest Direct PortfolioAge-based onlyIn-state only
MaineNextGen 529iShares age-based onlyNone
MissouriMOST - Missouri's 529 Education PlanAge-based onlyAny 529 plan
NebraskaNEST 529 (Nebraska Education Savings Trust)Age-based onlyIn-state only
North CarolinaNC 529 PlanAge-based onlyNone
OhioCollegeAdvantage 529 Direct PlanAge-based onlyIn-state only
OklahomaOklahoma 529 College Savings PlanAge-based onlyIn-state only
OregonOregon College Savings PlanAge-based onlyIn-state only
PennsylvaniaPA 529 Investment PlanAge-based onlyAny 529 plan
Rhode IslandCollegeBound SaverAge-based onlyIn-state only
TennesseeTNStars College Savings 529 ProgramAge-based onlyNone
VermontVermont Higher Education Investment PlanAge-based onlyIn-state only
WashingtonDreamAhead College Investment PlanAge-based onlyNone
WisconsinEdvest College Savings PlanAged-based onlyIn-state only

Teacher’s Pets

These states’ age-based 529 investment options cost just a little more than 0.40% annually. But they may be worth considering for in-state folks due to the tax benefits.

StatePlan NameClark's Investment ChoiceState Tax Benefits
District of ColumbiaDC College Savings PlanAge-based onlyIn-district only
IndianaCollegeChoice 529 Direct Savings Plan; only recommended for in-state residentsAge-based onlyIn-state only
KansasLearning Quest 529 Education Savings ProgramAge-based onlyAny 529 plan
Virginia*Invest529Age-based onlyIn-state only

*Index portfolios feature annual costs of less than 0.20%. However, Clark doesn’t recommend anything outside of the age-based options for most people.

Needs Improvement

The 529 plans in these states aren’t worth investing in due to high costs — even if they offer tax deductions.

  • Alaska*
  • Arkansas^
  • Hawaii
  • Idaho#
  • Kentucky
  • Maryland*#
  • Mississippi#
  • Montana^
  • New Jersey
  • North Dakota#
  • South Dakota
  • Texas
  • West Virginia#

*At least one option features annual costs of less than 0.20%. However, Clark doesn’t recommend anything outside of the age-based options for most people.

^Offers tax deduction for residents on contributions to any 529 plan.

#Offers tax deduction for residents only on in-state 529 plan contributions.

No 529 Plan Offered

There’s only one state that doesn’t currently offer a 529 plan.

  • Wyoming

529 Savings Plans vs. 529 Prepaid Tuition Plans

There are two types of 529 plans: 529 savings plans and 529 prepaid tuition plans.

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Savings plans are more commonplace. They typically involve investing in index funds or age-based portfolios (the 529 equivalent of target date funds).

The IRS defines the expenses that qualify; for students in kindergarten through 12th grade, there’s a $10,000 annual limit.

With post-secondary education, almost every school-related expense is eligible for tax-free withdrawal including tuition, fees, books, supplies, room and board.

Some states and schools offer a different way to fund a child’s education: prepaid tuition plans. The investment options are the same or similar to 529 savings plans. But unlike savings plans, these plans don’t cover expenses like room and board: just tuition at the rate you lock in when you open the plan. You’re essentially paying for tuition by booking it years in advance at a lower cost. But there are stipulations, and not everything is guaranteed.

The IRS will tax any withdrawal you make from a 529 plan that you don’t use for qualified educational expenses. You’ll also get hit with a 10% penalty (with some exceptions).


Things To Know About 529 Plans

Here are a few extra tips if you’re planning to set up a 529:

  • It’s better to open a 529 account in your name rather than in your child’s name. List your child as the beneficiary.
  • If your child doesn’t need the money — perhaps they’ll get a scholarship — you can change the beneficiary to any eligible child. Or you can withdraw the money and pay income tax on it plus a 10% penalty.
  • You’re allowed to name only one beneficiary per account. So you may want to open separate 529 plans if you have multiple children. Plus, their ages may be different, which will impact your investing choices.
  • It’s critical that you understand the fees, restrictions and tax rules for the specific 529 plan you choose. You can find at least some of that information in each plan’s disclosure. Note that I’s not necessarily called a “disclosure,” and you may have to hunt for it. Start at the bottom of the plan’s website.
  • You can’t switch freely between investment options. Usually you’re allowed to switch allocations up to twice per year or when you change the beneficiary.
  • 529 plans can impact financial aid eligibility, but the specific impact depends heavily on the circumstances. You’ll need to do your own research into that.

Final Thoughts

A 529 plan can be an excellent (tax-free) way to save and invest for your child’s education. Just make sure that you aren’t sacrificing your own retirement in favor of funding your child’s 529 plan.

If you’re ready to pick a 529 plan, Clark recommends that you invest in an age-based, direct-sold plan with minimal annual expenses.


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