Online Investing Hacks

A College Savings Plan in Every State

Cut through the confusing array of Section 529 college savings plans by focusing on state tax breaks, investing options, and costs.

Section 529 college savings plans [Hack #92] are almost too much of a good thing. State Treasurers have run amok, sponsoring plan after plan. In Nevada, parents face seven choices. Parents are free to invest in any state plan offered, if they can decipher the maze of different spending rules, contribution limits, investment options, and fees. Compounding the confusion, financial advisors have jumped into the fray, offering advisor versions of college savings plans. It’s actually easier to choose a Section 529 plan than you might think. Online tools help you understand your choices and select the best plan for you and your child.

To select a college savings plan, you must make three decisions:

• Enroll in a plan directly or through a financial advisor

• Invest in state or out of state

• Choose by type of investment option

Your first decision is whether to go it alone or hire a financial advisor [Hack #99] . An advisor can sort through the options for you, but you pay for that help in more ways than one. When you buy a plan through an advisor, you pay commissions as well as higher ongoing expenses [Hack #59] , which cut into your investment returns. Bottom line, you’ll have less to pay for college. To keep advisor costs under control, look for a fee-based financial planner. Not only do these planners charge a fixed fee ...