<p>H and I are considering (somewhat late in the game) investing in 529 plans for our kids. Our two oldest are already in high school, but we have younger ones in 7th and 3rd grades. I'm just starting to research 529s, but figured that you folks probably know tons about them. I'm particularly interested in which states have good investment choices. There's been a lot of bad press about the losses my own state's 529 funds (Illinois) have incurred (although it looks like there's a tentative agreement where Oppenheim is going to make good on some of the losses), so I'm not sure I want to go there. If you have any thoughts on 529 plans in general or on any plan in particular, I'd love to hear them. Likewise if anyone can steer me in the direction of a good website to educate myself. Thanks!</p>
<p>One obvious advice would be to look for Illinois based fund due to the tax deductibility of such contribution. Most recommendations I have seen always point to the importance of low management cost. Watch out for account maintenance or yearly fees. For initial small amount, these fees could be quite a bit when you start out with multiple accounts for multiple beneficiaries. I don’t know specific fund for Illinois, but funds that invest with Vanguard are usually found at the top of a lot of recommended 529 plan lists.</p>
<p>Try savingforcollege.com</p>
<p>My kids plans are in the Utah plan (even though I live in California). The Utah plan consistently is one of the highest rated ones.</p>
<p>If you go with Utah plan, you would lose the deductibility for Illinois state tax on your contribution. Utah plan has a really low management fee but it is very hard to beat the 3% state tax deduction right off the bat.</p>
<p>Here is a good article from Money regarding 529 plans. It includes a list of all as well as the best 529 plans. </p>
<p>[529</a> Guide 2007 - Money Magazine](<a href=“http://money.cnn.com/magazines/moneymag/529plans/2007/table.instate.html]529”>529 Guide 2007 - Money Magazine)</p>
<p>In general, I’m a big fan of 529 plans. One thing to keep in mind with these investment ratings is they are backward-looking, meaning (as you hear all the time with investments) past performance is no guarantee of future results. Oppenheimer really screwed up with their fixed income options in their 529s, but they’ve been a good company, and I think they’ll do much better going forward.</p>
<p>One thing you can compare is costs. Obviously, lower is better, but it becomes a more important factor the longer your child is from enrolling. It’s hard to overcome the tax deduction Illinois gives you if your child is only a few years from college.</p>
<p>As good as 529s are, there are drawbacks. You’ll pay taxes and a penalty on any gains if the money isn’t used for qualifying expenses. As long as you have more than one child, you have less chance of dedicating money to college and then finding your beneficiary isn’t going, as you can switch beneficiaries of these accounts. Also, if ALL your college savings are in 529s, you’ll miss out on being able to take advantage of federal tax deductions (such as the American Opportunity - formerly Hope - and Lifetime Learning credits).</p>
<p>The Joe Hurley site, savingforcollege.com, is a good source of information. You can also get good advice on this and other financial topics from a financial advisor (NOT a broker, but preferably one with a CFP or other legitimate credential). You’ll probably be guided into a 529 option with higher up front costs, though (to compensate the advisor) - basically, paying for advice. May or may not be worthwhile to you.</p>
<p>I made out ok with the College Illinois plan. We more than doubled the money we put in. It guarantees to increase so it’s inflation protected. The plan is closed for this year ( April 30th) Lord know what will happen after the actuaries figure out what they will need for contracts going forward.</p>
<p>I believe Illinois has two different forms of 529 plans, one called Bright Start allows investing in selected funds while the other College Illinois is a plan by which you prepay tuition for a selected number of “semesters” at a selected college level. The Bright Start program is/was managed by Oppenhiemer. I had looked at the prepaid tuition plan a couple of years ago and decided against it because child’s interests were primarily OOS and benefits for OOS did not seem so great.</p>
<p>Thanks everyone! I’ve done research at some of the suggested sites, and it looks like the Illinois Bright Start College Fund is my best bet. There’s an option for some Vanguard index funds, the fees aren’t terrible, and it’s hard to beat the state income tax deduction (worth $600 if we contribute the maximum deductible amount!)</p>
<p>Have you considered the Independent 529 Plan? It is not an investment plan, but a prepayment plan into a large consortium of colleges, so for member colleges, there is no chance that your “investment” may fail to match the inflation rate in college tuition, unlike those state 529 plans.</p>
<p>Members include Princeton, MIT, Stanford, Duke, Chicago, Johns Hopkins, Amherst, Pomona, Wellesley, Rice, etc.</p>
<p>[529</a> Plan: Member Colleges](<a href=“http://www.independent529plan.org/colleges/index.html]529”>http://www.independent529plan.org/colleges/index.html)</p>