Nearly all states offer 529 plans, popular ways to save for a child's future college expenses. The plans allow withdrawals for college expenses that are free of federal taxes. Two-thirds of the states also extend state tax deductions or credits to residents enrolling in their 529s.
Enrollment and investment options have expanded greatly since the plans were introduced in 1996, bearing the section number of the federal tax code that created them. Below are top online resources to sort through the options:
— College Savings Plans Network: This association of states' college savings plans runs a website, www.collegesavings.org , with tools to compare states' 529 plans, explain how they work, and link to other resources such as college expenses calculators. The site also provides links to websites for individual states' 529s.
— Savingforcollege.com: This site offers tips and tools to research college-savings options. The privately run site also ranks 529 plans, analyzing thousands of 529 portfolios each quarter based on 1, 3- and 5-year investment performance.
— Morningstar: The investment research company has a "Real Life Finance" tab on its website with a "Save for College" section. Morningstar rates 529 plans, and offers a 529 plan screener including ratings at www.morningstar.com/529-plan/529-plan-screener .
— Government and industry resources: The U.S. Securities and Exchange Commission has an introductory guide to 529s available at www.sec.gov/investor/pubs/intro529.htm .
— An independent securities regulator, the Financial Industry Regulatory Authority, also has information on 529s at www.finra.org/Industry/Issues/CollegeSavingsPlans/ .
— The Investment Company Institute, a trade group for mutual fund companies, has information at www.ici.org/investor_ed/brochures/bro_529_plans_2 .
