Best 529 Plan For Out Of State

It is not necessary that your state will always have the best 529 plan for you, though it might offer some good incentives. Sometimes, even with the incentives, the plans do not make for the best plan. In the US, people are free to choose plans of whichever state they might like. So here are some pointers that might help you select the best 529 plan for out of state residents.

We base our tips on the report by Morningstar FundInvestor, where the best and worst were detailed. The following are the main points summarizing this report:

1. The best direct sold 529 plans for out of state are Alaska's T. Rowe Price College Plan, Michigan's Education Plan and Utah's Educational Plan. These plans have low asset based costs and have a fair to good range of investment options. The quality core of investment options in these three plans have been rated good to excellent. These three plans are managed by the T. Rowe Price College, TIAA-CREF and Vanguard respectively.

2. From the plans sold by brokers are Colorado's Scholars Choice College, Kansas' Learning Quest Education and Virginia's CollegeAmerica. The program managers for these three plans are Smith Barney, American Century and American respectively. These plans do not have as low asset based costs as the direct sold plans, but even then they do rate below average to average on this scale. They have a good to excellent investment flexibility and rate good to excellent on quality core investment options.

3. If you are looking for the best for out of state residents, then you must surely avoid the plans of the states of Alabama, Arizona, Maine, Tennessee and Wyoming. These plans have been rated as the worst in the nation. They are expensive plans, with high asset based costs attached to them, and have only a fair rating on quality core investment options. Out of these five state 529 plans, the plan of the state of Tennessee is managed by the TIAA-CERF. The program management fee charged by the state of Wyoming, i.e. 0.95%, is very high in comparison to that of the other states.

Comparing all the plans in the nation, the Utah Education Savings Plan emerges as the best 529 plan for out of state investment. The plan has low rates for opening account and management, and has good flexibility with its Vanguard index funds.