How to Determine if Your State's 529 is a Good Plan for You

USA Today gives us some guidelines for deciding whether or not your state's 529 college savings plan is a good deal for you:

Kerry O'Boyle, an analyst at investment research firm Morningstar, says he would never recommend investing in a subpar 529 plan just to receive a state tax deduction. But what should you do if you think that while your state's plan is respectable, another state's is better? Some factors to consider:

• The amount of the deduction.
• Your tax rate.
• The amount you plan to contribute.

For me, the decision was pretty easy. Michigan has a pretty good 529 plan, one that's worth considering even if you don't live in the state. But since I do, it made my decision a no-brainer. I get a good plan plus a $400 tax savings. I'll take it!!!

For more thoughts on 529 plans, see these posts:

• 529s Are the Undisputed Kings of College Savings

• Why 529s Make Sense

• FAQs on 529 College Savings Plans and Why 529s are a Good Deal

Comments

[The Saving Freak]

529's are the best way to go unless you want to spend tax free money on private education for earlier years then you should consider the Coverdale account

[Compounding]

In Indiana, we have a poor 529 plan, but it becomes much sweeter since they give a 20% state tax credit, up to $1000. They also have a plan that has no fees.