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What Are the Best 529 College-Savings Plans — Dollars and Sense

401(K) 2012, Flickr

Earlier this week, the investment ratings firm Morningstar released their annual list of the year’s best 529 college-savings plans.

The 529 investment plan gets its name from section 529 of the Internal Revenue Code, which states that contributions to these particular investments are exempt from taxation on any generated profits. Ideally, these investment accounts are opened for a child as soon as he is born.

According to Laura Lutton, director of Morningstar’s fund-research group, the earlier you start a 529 savings plan for a child the better, due to the increasing costs of college and the limited time available to save.

This year’s list consists of plans both optimal in price and performance and are ranked with a gold, silver, bronze, neutral or negative label, similar to the way Morningstar ranks mutual funds.

Morningstar’s Top Four Gold Plans and Top Four Silver Plans

  • Gold: T. Rowe Price College Savings Plan
  • Gold: Maryland College Investment Plan
  • Gold: Utah Educational Savings Plan
  • Gold: The Vanguard 529 College Savings Plan
  • Silver: iShares 529 Plan
  • Silver: Michigan Education Savings Program
  • Silver: CollegeAdvantage 529 Savings Plan
  • Silver: CollegeAmerica

[ABC News]

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