Best 529 College Savings Plans By State

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

But what are the best 529 plans by state? How does money expert Clark Howard evaluate the best 529 plans? And what exciting new rule makes investing in a 529 plan an even easier decision? 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.

Rolling Your 529 Plan Funds Into a Roth IRA

For a long time, a 529 plan was somewhat of a tax gamble. You’d stash away funds for your child’s college education. But if they didn’t attend college, your choices were sort of lousy.


One, you could re-gift the money to a relative attending college. (That’s hardly the same as re-gifting a candle you got for Christmas!)

Or two, you could withdraw the money by paying a 10% penalty — on top of counting the money as regular income at your federal income tax bracket for that year.

Starting in 2024, the IRS will introduce a third, more attractive choice. You’ll be able to roll over 529 funds into a Roth IRA should your child not attend college.

“If you don’t know if your kid’s going to go to college, there’s still an enormous tax advantage to doing 529 now because the money can eventually be converted tax-free into a Roth IRA,” Clark says.

“The conversation changed completely because before, if somebody put money in a 529 and it wasn’t used for that, you got killed on taxes.

There’s a $35,000 lifetime cap. And annual IRA contribution limits apply. (For 2023, that’s $6,500, plus $1,000 in catch-up contributions for people over 50). But that opens the door for even more lax rollover rules in the future.

It also could lead to your child choosing a more frugal option for post-secondary education. If your child took $35,000 at 22 years old and rolled it into a Roth IRA, it would be worth $735,085.81 at 67 years old (assuming a 7% annual return).

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.

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 fewer 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 to pick 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 an extensive 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%
  • Needs Improvement: Avoid the 529 plans in these states, which charge more than 0.40% in annual expenses

Clark strongly advises that you invest only in the exact state plan and investment choice that he specifies in the 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.

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

Dean’s List

There are 25 different states with the entire range of passively-managed, age-based options sitting below 0.20% in annual costs. Just 18 months ago, 19 states made the cutoff based on the annual expenses of their 529 plans. That illustrates just how competitive these plans have become.

StatePlan NameClark's Investment ChoiceState Tax Benefits
ArizonaAZ529Age-based index onlyAny 529 plan
CaliforniaScholarShare 529"Enrollment Portfolio Passive" only (age-based equivalent)None
ConnecticutConnecticut Higher Education Trust (CHET)Fidelity Index Portfolio only (age-based)In-state only
DelawareDE529Fidelity Index Portfolio only (age-based)In-state only
Florida*Florida 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
KansasLearning Quest 529 Education Savings Program"Equity Index Portfolio" only (age-based)Any 529 plan
Louisiana*START (Student Tuition Assistance & Revenue Trust)Age-based onlyIn-state only
MassachusettsU.Fund College Savings 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
MissouriMOST - Missouri's 529 Education PlanAge-based onlyAny 529 plan
NebraskaNEST 529Index age-based onlyIn-state only
NevadaNevada College Savings Plans Program"Target Enrollment Portfolio" only (age-based equivalent)None
New HampshireUNIQUE College Investing PlanIndex age-based onlyNone
New MexicoThe Education PlanAge-based onlyIn-state only
New YorkNew York's 529 College Savings PlanAge-based onlyIn-state only
OhioOhio's 529 CollegeAdvantageVanguard age-based onlyIn-state only
Rhode IslandCollegeBound SaverAge-based onlyIn-state only
South Carolina*FutureScholarAge-based onlyIn-state only
Utahmy529Age-based onlyIn-state only
West VirginiaSMART529Age-based onlyIn-state only
WisconsinEdvestAge-based onlyIn-state only

*Available only to in-state residents.

Honor Roll

Some of these states barely missed the Dean’s List cutoff. These 16 states feature age-based options that cost less than 0.40% in annual costs.

StatePlan NameClark's Investment ChoiceState Tax Benefits
AlabamaCollegeCountsAge-based onlyIn-state only
ColoradoCollegeInvestAge-based onlyIn-state only
District of ColumbiaDC College Savings PlanYear of College Enrollment Portfolios only (age-based equivalent)In-district only
IdahoIDeal - Idaho College Savings ProgramAge-based onlyIn-state only
IndianaCollegeChoice 529 Direct Savings PlanAge-based onlyIn-state only
MaineNextGen 529iShares age-based onlyAny 529 plan
New JerseyNJBESTAge-based onlyIn-state only
North CarolinaNC 529Age-based onlyNone
OklahomaOklahoma 529 College Savings PlanAge-based onlyIn-state only
OregonOregon College Savings PlanAge-based onlyIn-state only
PennsylvaniaPA529Age-based onlyAny 529 plan
TennesseeTNStarsAge-based onlyNone
TexasTexas College Savings PlanAge-based index onlyNone
VermontVT529Age-based onlyIn-state only
VirginiaVirginia529Age-based onlyIn-state only
WashingtonWA529Age-based onlyNone

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
  • Kentucky
  • Maryland*#
  • Mississippi#
  • Montana^
  • North Dakota#
  • South Dakota

*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.

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, and 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.

Before the new rules go into effect in 2024, 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. You can also withdraw the money and pay income tax on it plus a 10% penalty. Or, starting in 2024, you can roll the money into a Roth IRA.
  • 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 it’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.

Speaking of retirement plans, you will soon be able to roll your 529 savings plan funds into a Roth IRA if your child doesn’t attend college.

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.