In which state plan should I get an account?
Decision tree — Which state?
- Does my state where I file taxes give a deduction or credit for contributions? Is the deduction or credit limited to my own state's plan? In states with no deduction, shopping nationally for the best plan (preferred allocation options, lowest fees) is suggested.
- Does my state plan allow all the latest federal expansions?
- Does my state have relatively low fees? How do the fees and investment options compare to top-rated plans in other states?
Morningstar 529 plan ratings: Morningstar 529 Ratings: The Best Plans of 2025
Saving for College plan ratings: https://www.savingforcollege.com/529-plan-ratings
In general, your home state lower fee direct-sell plan will be one of your best 529 account options. However, it is wise to double check for a better deal considering your individual situation. While most home states may give a deduction or credit for a resident’s deposits, be sure to check fees. An outside the state plan with lower fees may over time offset the in-state tax benefit. As discussed above, every state except Wyoming as well as the District of Columbia now offers at least one 529 plan. Many have both advisor-guided and (lower fee) self-directed plans, leading to over 100 current plans.
(*See Appendix for the website link of individual state program descriptions.)
Jolie lives in California, but she has a trusted Pennsylvania resident brother. She checks numerous state fees and benefits. State tax treatment of withdrawals for K-12 expenses is determined by the state where an owner files state income tax. Her desired withdrawals for K-12 expenses are not qualified for California tax purposes, so she transfers ownership of her children’s 529 accounts to her Pennsylvania brother for rollover to his state plan.
No statement or example on this site should be considered a specific recommendation for your personal situation. Investing and tax strategies each carry significant risks. Examples herein may not apply to your situation. Please consult your estate attorney, tax advisor, or financial advisor for personal advice.