Best 529 Plans for 2021: Reviews, Ratings, and Rankings

529 plans are the most commonly used college savings vehicle among my regular readers. They benefit from higher annual contribution limits than Educational Savings Accounts (Coverdell ESAs), can be front-loaded for up to five years, and sometimes offer a break on state taxes. While not as flexible, they are superior to a UTMA or other taxable account due to protection from tax drag as the account grows and the tax-free withdrawals for educational purposes. As a general rule, the contribution limit is $15,000. However, there is nothing keeping your spouse, father, and mother from also opening 529 plans for your child. And they can all front-load five years’ worth of contributions to their account if they like. Every state has at least one 529 plan, and these plans compete for investor dollars across the country. This generally results in significant improvements over time as fees come down and investment options improve.


Which States Offer the Best 529 Plan Tax Breaks?

An investor can mostly use any 529 they please. However, many states offer either a state tax deduction or a state tax credit on contributions up to a certain amount. If your state 529 (and remember it’s all about the owner’s state, not the beneficiary’s state) offers this, you should use it first, at least up to the amount of the tax deduction or credit. The following states offer a state tax deduction or credit for contributions to their 529 plan.

Note that the info in this chart is almost constantly changing. I already had to update four

Keep reading this article on The White Coat Investor.

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