Which 529 plan is best for you?

Millions of Americans have discovered that Section 529 plans, also known as qualified tuition programs, are among the best  ways of saving for college education.

The growing popularity of these plans is proven by their increase in total assets. Nationwide, this amount grew from a total of $2.6 billion in 2000 to more than $92 billion by mid-2006. Along with this growth in assets, the number of states offering 529 plans has also ballooned. Every state now offers a 529 plan, and several hundred private colleges offer a national prepaid tuition plan, the Independent 529 Plan.

Do you need a vehicle to save for college education? How can you evaluate and compare 529 plans easily? Don’t be confused by the myriad costs, fees, and options available. Fortunately, a host of resources is available at your fingertips to help you determine the quality of the investment alternatives and flexibility of the investment options, and to help you get a clear understanding of the significant tax benefits and contribution options these plans provide.

Start at home
To begin, look to your home state plans. The full tax benefits and incentives they offer are probably available only to state residents. In fact, most plans require either the account owner or the beneficiary to be a resident to open the account.

If you are a resident of Wisconsin, visit edvest.com to learn more about the state’s 529 plan. An added benefit of Wisconsin’s plan is that you can establish an account directly with EdVest without paying the fees and commissions of a bank, broker, or other financial institution.

Look at plans available in other states
Are you looking at out-of-state schools? Several independent organizations provide a wealth of information and tools to help you compare different 529 plans and find schools that participate in a prepaid tuition program. FinAid (finaid.com), for example, is one of the most comprehensive online sources for objective information on the different 529 plans. Morningstar.com’s section on 529 plans (select the Personal Finance tab and 529 Data) provides ratings and other details about the investment vehicles available in the plans.

FinAid (finaid.com) provides:

• a description of the different plan options in easy-to-understand language
• links to the websites for the various state plans
• tax and benefit information
• information about eligible schools participating in the prepaid tuition program

Morningstar.com provides:

• a review of 529 plans with analysis of the investment vehicles and mutual funds available in each plan
• an overview of each plan
• information on tax benefits, fees, expenses, purchases
• ratings of the mutual funds available in the plans

Government and other websites can also help
Other informative websites with useful information on 529 plans include savingforcollege.com, the U.S. Securities and Exchange Commission, the IRS, and the websites of the individual state 529 plans.

For tax information on 529 plans, please contact a Schenck account director. To discuss investment options for funding college education, or for help in finding what you need in the websites mentioned in this article, contact Jesse Nelson of Schenck Investment Solutions LLC at 800-236-2246 or 920-731-8111.

Jesse L. Nelson, MBA, is an investment manager with Schenck Investment Solutions LLC. In addition to constructing and managing portfolios for individual clients and 401(k) plan participants, Jesse also researches and analyzes stocks
and mutual funds.

March 2007