National 529 Day is just around the corner (May 29th), and the top 529 providers are hosting celebratory contests, giveaways, and educational events to spread awareness.
A 529 plan is designed to help you save toward your child's future education expenses. By opening a 529 savings account, you may be able to reduce future out-of-pocket costs and get a tax break on your state income tax return.
You aren't necessarily limited to your state's 529 plan, as many of the best-performing 529s allow out-of-state participants. However, you may lose some of the strongest benefits with an out-of-state plan.
So, which 529 plan is best for your child in 2025?
Top-rated 529 plans in 2025
- Bright Start Direct-Sold College Savings Program (Illinois)
- U.Fund College Investing Plan (Massachusetts)
- Oregon College Savings Plan
- Ohio's 529 Plan CollegeAdvantage
- UNIQUE College Investing Plan (New Hampshire)
- ScholarShare 529 (California)
- Pennsylvania 529 Investment Plan
- my529 (Utah)
- New York's 529 College Savings Program
- Alaska 529
Compare Best 529 Plans
The best state 529 plans are state-run programs managed by brokerages, banks, and other financial institutions. While similar to the best custodial brokerage accounts, a 529 college savings account has its own rules, contribution limits, and tax advantages.
In no particular order, here are reviews of the best-rated 529 plans as picked by Business Insider's editors in 2025.
Bright Start Direct-Sold College Savings Program (Illinois)
Bright Start Direct-Sold College Savings Program is one of the highest-rated 529 plans with low fees, including no minimum deposit requirement.
Bright Start offers multiple portfolio options based on your investing experience, risk tolerance, and goals. Portfolio
Bright Start's 529 plan also offers one of the best tax advantages for Illinois residents: Married couples can deduct up to $20,000 annually ($10,000 per individual taxpayer). Moreover, qualifying expenses aren't subject to state income tax.
Friends and family can contribute to Bright Start's 529 through the Ugift platform.
Illinois residents can earn a one-time $50 deposit into their Bright Start 529 plan with Illinois First Step if the child was born or adopted on or after January 1, 2023. You can claim this promotion during the enrollment process
Account minimum: $0
Fees and expenses: 0.06% plan manager fee, 0.02%-0.32% estimated expense of underlying investments, 0%-0.025% treasure administrative fee
Total asset-based expense ratio: 0.060% to 0.765%
U.Fund College Investing Plan (Massachusetts)
This Fidelity-managed, Massachusetts advisor-sold 529 plan offers an age-based, static portfolio and an interest-bearing account option of Fidelity mutual funds and index funds portfolio. There's no account minimum and no annual account fees, but you must meet a $15 monthly contribution minimum requirement.
MEFA's U-Fund 529 plan earned a Morningstar Gold rating in 2024, making it one of only five other plans to receive this rating.
A U.Fund 529 can be used at any accredited college and up to $10,000 per year of K-12 tuition expenses.
A couple can get up to a $2,000 state income tax deduction ($1,000 for individuals).
Through the BabySteps Savings Plan, you can receive a $50 reward toward your U.Fund account if your child is born or adopted in Massachusetts (on or after January 1, 2020).
Account minimum: $0
Fees: Up to 0.45% program management fee
Total asset-based expense ratio: 0.10% to 1.22%
Oregon College Savings Plan
Oregon's 529 college saving plan has redeemed $1.80 billion for education for people across the US.
Sumday Administration, LLC manages this Oregon-based, direct-sold 529 savings plan. For a $25 minimum, you'll access mutual funds from various fund families (such as Vanguard, T.Rowe Price, and American Beacon) and an FDIC-insured option. It offers age-based/enrollment year portfolio options and static investment portfolio options.
Rather than a tax deduction, investors get a refundable tax credit of up to $360 (varies by income).
Up to ten people can win a prize of $250 in an Oregon College Saving Plan account by entering the Smart Start Sweepstakes (ends March 31, 2025). Winners are drawn randomly on or around April 15, 2025. You are only allowed one entry per child, and entry forms can be found online.
Additionally, babies born in Oregon and under one year will automatically earn $25 toward their account with Baby Grad.
Account minimum: $25 ($5 per month with automatic investment plan)
Fees: 0.20% program management fee
Total asset-based expense ratio: 0.20% to 0.652%
Ohio's 529 Plan, CollegeAdvantage
For a $25 minimum, the Ohio-based 529 direct-sold savings plan offers a diverse selection of age-based, enrollment-based Vanguard and DFA mutual fund portfolios with tax-free growth, plus an individual fund portfolio option.
You can also invest in CDs through a Fifth Third Bank savings account ($500 minimum). Single and joint filers can get a tax deduction of up to $4,000 annually.
The downside of Ohio's 529 Plan is there's no online gift portal to share with friends or family for easy contributions. Instead, you can only receive gift certificates or mail-in-gift certificates.
Account minimum: $25 minimum ($500 for Fifth Third Bank)
Fees: 0.107% managers fee, 0.02% state fee, 0.105% program management fee, between 0.02% to 0.31% on portfolios
Total asset-based expense ratio: 0.145% to 0.435% (none for Fifth Third Bank option)
UNIQUE College Investing Plan (New Hampshire)
Fidelity manages this low-cost direct-sold savings plan of actively managed mutual funds and index funds for no minimum deposit. It offers age-based/enrollment year portfolio options and static investment options (including interest-bearing accounts and stable value portfolios).
UNIQUE 529 was rewarded a Silver rating from Morningstar in 2024.
If you opt into the automatic investment plan, you must meet the $15 monthly contribution (or $45 per quarter).
New Hampshire's UNIQUE College Investing Plan offers one of the largest maximum contribution limits of up to $621,411 per beneficiary. However, it does not offer an annual tax deduction.
Account minimum: $0
Fees: up to 0.17% program management fee, up to 0.78% underlying investment fees
Total asset-based expense ratio: 0.05% to 0.95%
ScholarShare 529 (California)
ScholarShare 529 is one of the best-rated 529 plans for California residents and could be a good option for out-of-state participants. This college savings 529 account is a flexible plan offering state-tax incentives, an easy-to-access gifting platform, and unique investment portfolio options (age-based, enrollment-based, multi-fund, individual-fun, and a principal protection portfolio). This California 529 plan even offers an ESG portfolio option for socially responsible investing,
Although contributions aren't eligible for tax deductions, earnings grow tax-deferred. Remember that all withdrawals for qualifying academic expenses from top 529 plans are tax-free.
Family and friends can contribute to your child's 529 with Ugift.
Account minimum: $0
Fees: 0.01 plan manager fee, 0% to 0.04% board administrative fee
up to 0.06% program management fee (varies by portfolio option), 0.03% to 0.33% underlying investment fee
Total asset-based expense ratio: 0.06% to 0.42%
Pennsylvania 529 Investment Plan
With Pennsylvania's highest-rated 529 plan, you can access multiple Vanguard investment options, including multi-fund static portfolios based on risk tolerance, target enrollment portfolios of Vanguard mutual funds, and a socially responsible equity portfolio.
You can manage your 529 plan account with the READYSAVE 529 app.
PA 529 was given a Gold rating by Morningstar in 2024, which is the second year in a row it has won this rating.
This 529 plan account is managed by the Pennsylvania Treasury Department, Vanguard, and Ascensus, with no minimum requirement (subsequent deposits must be at least $1) and up to $36,000 annual tax deduction ($18,000 for single filers) for in-state and out-of-state residents.
The Keystone Scholars program awards every baby born on or after January 1, 2019, a $100 investment toward future education savings. Parents can claim this money on the child's first birthday by registering online or calling 1-800-440-4000.
Account minimum: $0
Fees: 0.40% with an annual cap of $500
Total asset-based expense ratio: 0.1875% to 0.2875%
my529 (Utah)
My529 is a direct-sold 529 savings plan consisting of Vanguard and Dimensional mutual funds, plus a PIMCO Interest Fund account option.
FDIC-insured accounts are also available through Sallie Mae Bank and US Bank. My529 offers age-based, enrollment-based, and static portfolio options, such as a customized static portfolio of up to 30 hand-picked underlying funds.
This 529 plan's tax benefits are more limited than some other plans. Utah residents can receive a tax deduction of 4.55% on up to $219.31 per year (up to $109.66 per year for single filers).
Account minimum: $0
Fees: 0.10% to 0.13% program management fee, up to 0.325% underlying investment fee
Total asset-based expense ratio: 0.100% to 0.221%
New York's 529 College Savings Program
New York's low-cost 529 College Savings Program is a direct-sold plan offering a huge selection of diverse Vanguard mutual funds through age-based/enrollment year portfolios (including risk level options) and static investment portfolios (including multi-fund options, individual fund options, and Interest Accumulation portfolio option).
Moreover, there are no underlying investment expenses, as it's included in the program management fee. Joint filers can deduct up to $10,000 a year ($5,000 for individuals).
Account minimum: $0
Fees: 0.12% program management fee
Total asset-based expense ratio: 0.12%
Alaska 529
As one of the top 529 plans, Alaska 529 (previously called the University of Alaska College Savings Plan) is a low-cost account with age/enrollment-based and static portfolios of T. Rowe Price mutual funds. Invest in unique multi-fund options like an Equity Portfolio, university-based portfolio, Fixed-Income Portfolio, and more.
Not only does Alaska 529 have one of the lowest expense ratios, but it also offers additional benefits for future University of Alaska students. However, there are no tax deductions.
Account minimum: $25
Fee: up to 0.05% program management fee, underlying investment fee ranging from 0.07% to 0.78%
Total asset-based expense ratio: 0.15% to 0.87%
What are 529 Plans?
A 529 plan is a tax-advantaged financial account for educational expenses. The money you contribute grows tax-deferred within the account, and many states offer tax deductions or tax credits for some contributions. Some also offer benefits like partial matching contributions.
While named for a section of the federal tax code, 529 plans are run by states. Essentially, they're investment accounts that specialize in saving for educational expenses. Each plan has slight variations, particularly around its investment options.
"The 529 plan offers income tax-deferred investing, and if distributions from the plan are for expenses that meet IRS criteria, tax-free investing," explains Sandi Bragar, CFA and chief client officer at Aspiriant.
Qualified 529 plan withdrawals
Withdrawals are tax-free when used for appropriate ("qualified," in IRS-speak) educational expenses, such as:
- Tuition for college, graduate school, or vocational school
- K-12 tuition and fees (up to $10,000 per year)
- Book and other school supplies
- Room and board
- Campus meal plans
- Student loan payments
However, you can only withdraw amounts that correspond to actual educational expenses. You can't create a tax loophole by withdrawing more money than you need for school.
History and purpose
College savings plans date back to the 1980s, while the 529 plan came about via congressional action in 1996. Further law changes in 2001 made qualified withdrawals tax-exempt and helped spark their growth.
Traditionally, these accounts were designed solely to fund tuition and related expenses for secondary education (i.e., a four-year college or university).
However, in recent years legislation expanded their uses to apply to K-12 tuition and fees, as well as technical schools, trade schools, and apprenticeships offered through community colleges.
Benefits of 529 Plans
- Tax advantages: You may qualify for a tax break on your state income tax return when contributing to a 529 plan with after-tax dollars. Most states allow at least some sort of tax deduction or credit for making 529 contributions.
- Flexibility: These plans offer a lot of flexibility in how the money can be used, such as by extending the plans to allow for some K-12 expenses.
- High contribution limits: The IRS does not technically limit how much you can contribute to a 529 plan, and there's no limit to the number of accounts you can have for one beneficiary. However, the IRS says you can't contribute more to a 529 plan than is necessary to pay the qualified education costs for the beneficiary.
Types of 529 Plans
There are two main types of 529 plans you can open.
Education savings plans
This is the most common type of plan. Money is invested within a pre-selected menu of investment options (usually mutual funds or ETFs from one or more investment firms) in the hopes that your funds will grow to help cover more future education expenses.
Prepaid tuition plans
This type of plan can function differently depending on the state it is issued out of. Generally, prepaid plans allow you to pay for tuition or credits at the current rate at schools that accept prepayment.
In doing so, you're still investing for future growth, but that growth is going to the school while you get the benefit of paying at today's prices, which are likely far less than what they'll be in the future.
Finding the Best 529 Plans for Your Needs
The best way to choose a 529 plan is to start with your state's plan, as you're more likely to benefit from in-state exclusive tax deductions or credits from your 529 plan contributions.
Remember, although many states offer tax deduction benefits, they are not always available to out-of-state participants.
Plus, some 529 plans don't offer tax deductions. For example, Pennsylvania's 529 plan offers one of the more lucrative tax advantages: up to a $36,000 annual tax deduction for both in-state and out-of-state participants.
Factors to Consider When Choosing a 529 Plan
Other factors you'll want to take into consideration are the:
- Minimum investment requirements: Many 529s are generally low-cost with no (or low) minimum deposit requirement to open. Still, evaluating the cost of joining a program and whether you're obligated to contribute a certain amount over time should factor into your decision.
- Fees and costs: High fees can reduce investment gains. Program management fees, account maintenance fees, and underlying investment fees are associated with 529s.
- Investment options: These accounts generally offer a range of mutual funds and index funds from different brokerages and banks, so make sure you pick a program with funds that align with your preferences. Most 529s offer static, age-based, and enrollment-based portfolios. But there are also more unique portfolio options, such as ESG portfolios or interest-bearing portfolios, that aren't available with all 529 programs.
- Type of plan: When deciding which 529 plan is best for you, consider whether you'd like to participate in an education savings or prepaid tuition plan. Most of the best 529 plans are education savings plans, but you may prefer to lock in tuition rates and opt in for a pre-paid plan.
How to Start and Use a 529 Plan
While the tax rules surrounding a 529 plan can be a bit nuanced, opening and using a 529 plan is generally relatively straightforward.
Choosing a plan
First, choose the 529 plan you want. Many people go with their state's plan, though some states offer more than one. However, if you don't like your state's plan, such as if it lacks tax benefits and the investment options have high fees, you can establish one in another state.
A 529 plan usually offers several investment options (usually mutual funds or ETFs, ranging from conservative to aggressive). Many also offer pre-defined portfolios, like target-date funds, that are age-based: They grow more conservative the closer your child gets to college age.
Setting up the account
Once you know what plan you want, setting up the account is usually similar to opening other investment accounts, though you'll need to input your own information and designate a beneficiary.
From there, you'll typically make an initial deposit into the account, such as via a bank transfer, and you'll select your investment options.
Making contributions
Beyond your initial deposit, you might decide to set up automatic contributions, similar to how you might make monthly investments in your 401(k).
There's some wiggle room if you contribute too much, such as by changing the beneficiary if the original one has leftover funds after attending college. Still, you generally want to consider how much money they'll need and contribute accordingly.
Making withdrawals
There are typically a few options for making withdrawals, depending on factors like the plan and the expenses. But one common option is to have your 529 plan send money directly to your school to cover tuition bills.
Another option is to withdraw into your bank or brokerage account, from which you can pay for qualified expenses.
529 plans FAQs
What is a 529 plan and how does it work?
A 529 plan is a tax-advantaged, state-run education savings program for parents to save on behalf of a child. They're funded with after-tax dollars and grow tax-free until withdrawal. Qualifying withdrawals for 529 plans (such as K-12 tuition, school supplies, etc.) are also tax-free. Most states allow out-of-state residents to participate in their plans.
Which 529 has the best performance?
Utah's my529 is one of the top 529 plans for college savings, earning a Gold rating from Morningstar's Analyst Rating for 12 consecutive years. Utah my529 is a top-performing 529 savings account due to its various portfolio options, such as enrollment and static investment options, plus the option of a customized portfolio.
What are the disadvantages of 529 plans?
Some disadvantages of investing in a 529 savings plan are the limited investment choices and potentially high fees. One of the most significant disadvantages is that contributing to a 529 account could also impact your eligibility for federal aid.
Should I use my state's 529 plan?
Which 529 plan is best for you may be your own state's plan, as you are more likely to benefit from an in-state tax deduction. However, if your state's plan is not a good fit, you can consider another state to find what 529 plan is best for you based on fees, tax benefits, and investment options.
Our Methodology: How We Reviewed The Best 529 Plans
We reviewed the best-performing 529 plans using Business Insider's rating methodology for investment platforms. But how are the best state 529 plans determined? Well, 529s are analyzed on various factors, including the best perks, tax benefits, fees, and more.
People may have varying risk capacities and financial goals they're working toward, but you'd be hard-pressed to find someone who doesn't prefer a cheaper way to invest. Therefore, the cost was a huge factor in determining our list.
