Articles for Financial Advisors

529 College Savings Plans

529 College Savings Plans

For 2013, the S&P 500 was up 32.4%; the average 529 college-savings plan returned 14% (source: Morningstar). Returns for 529 plans in 2013 ranged from -2% up to 34%, depending on state and available investment choices. Investment options and 529 annual fees vary from state-to-state. Investors can use pre-tax dollars to fund a 529 plan—plus 31 states provide some type of state income tax deduction. Annual fees vary from an average of 0.5% (direct signup) up to an average of 1.1% (using a financial advisor).


States With Tax Deductions for 529 Plans



Annual Deduction

Alabama, Arkansas, Connecticut, Michigan, NY, North Dakota

Up to $5K ($10K joint return)


Up to $2K ($14K joint return)

District of Columbia

Up to $4K ($8K joint return)


Up to $2K per beneficiary

Illinois, Mississippi, Oklahoma

Up to $10K ($20K joint return)


20% tax credit up to $5K


Up to $8K ($16K joint return)

New Mexico, West Virginia

Contributions are fully deductible


Up to gift-tax exclusion per beneficiary


Up to donor’s federal taxable income


Up to $5K (single and joint return)


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