The Best 529 In The Country Gets Even Better

My monthly column at Physician Money Digest discusses the recent changes to the Utah Educational Savings Plan.  I admit I’m a little biased, but I thought it was the best plan in the country BEFORE the recent changes.  Now there are even more options, including 6 DFA funds and 6 new Vanguard funds, and even lower expenses.  I also include a guide for how to decide which 529 to use for your given state.  Read more here:  Best 529 Plan


The Best 529 In The Country Gets Even Better — 33 Comments

  1. WCI: Could you help me compare the “agressive growth” USAA 529 plan to the same in Utah?

    I am a Texas resident so I get no benefits from the 529. I currently have the 529 for my son and will start one for my daughter after she is born next month.

    I use USAA for the majority of my banking needs.

  2. Beau, you can find out more at, but here’s the “Total Asset-Based Expense Ratio” for the two plans:

    USAA: 0.65% – 1.05% + $15 annual maintenance fee
    UESP: 0.160% – 0.224% (or 0.200% – 0.615% for the Static Investment Options) + $15 annual maintenance fee

    Source: and

    • Beau-

      As you know, I also use USAA for a lot of stuff, including several types of insurance, banking, and a home equity loan/mortgage for my investment property. Their investing side isn’t too bad, but it doesn’t compare to a place like Vanguard (or UESP) for that matter. Their 529, however, has one unique feature that makes it very interesting, a matching grant program.

      Here’s their plan document:

      In order to get the match, you have to be in the military and either a Nevada resident or stationed in Nevada. Your or your spouse must have earned a Purple Heart. The beneficiary must be a child or spouse. If you qualify for all these things, USAA will match up to a total of $1500 of contributions to the 529. It’s isn’t much, and few will be eligible for it, but if you are, it’s $1500 free. You can always put any 529 contributions above and beyond $1500 in the Utah plan.

      Aside from that, it’s a good program, but not as good as Utah’s. They’re invested in USAA funds, which aren’t as good as Vanguard and DFA fund and are more expensive. As a Texas resident, I see little reason for you to use USAA’s 529 over the UESP, aside from a bit of a convenience factor.

      • Appreciate the response. I checked out the saving for college site. Pretty useful. Next month when Emma is born I am going to switch both the kids over to the Utah plan.

  3. A reason a resident of PA may want to contribute to the PA plan that may be overlooked — value of PA 529 is excluded from PA Inheritance Tax, not other states’ plans. So in the case of someone putting large amounts into a plan, it can make a big difference. I had a grandparent put $100K into each grandchild’s PA account, which was not taxable for PA Inheritance Tax (which would be 4.5 percent for lineal descendents if invested in Utah or any other state’s plan.)

    • Inheritance tax is imposed upon death, so if said grandparent bequeathed money in their will to their grandchildren’s 529 plan, but lived past their grandchildren’s formal education years, how would this help?

      • Thanks for sharing that great point Mary. I was unaware of that. I suspect there may be a few other state-specific 529 provisions out there I am unaware of (it’s tough to keep track of 50 plans.) Keep in mind you could probably always invest in Utah’s (or someone else’s) 529, then roll it over to Pennsylvania’s at a later age.

        A couple of other considerations about Pennsylvania is that the tax for transfer to lineal descendants is only 4.5%, so it is quite low. It’s also interesting that there is no exemption for this inheritance tax, so it’s paid on the entire estate (except for some exempt farming real estate and on the amount inherited by the spouse.)

  4. How about the NY direct plan ( It basically has Vanguard funds, and ERs are a teeny bit lower than UESP.

    • The New York plan is also very good, especially for New York residents. They charge 0.17% overall (close enough to the UESP not to matter, although it was 0.25% until a year ago) plus ERs of 0.03% to 0.11% on Vanguard institutional index funds, which are actually a little lower than the UESP. They also have a much bigger state tax deduction for NY residents ($10K for a married couple instead of ~$3500 for the Utah) plan. The main advantage of the Utah plan over the NY plan is more investment options, especially now with the DFA funds. If I were a New York resident I probably would just use the NY plan, even if I were investing more than $10K a year. But if I were neither in Utah or NY, I would still choose the Utah plan.

  5. Under John Schneider’s financial leadership, the fifth-oldest player on the authentic nike jerseys. On Wednesday, Mora had said he was charging ahead with assessing 2009 and preparing for next season if they get better QB play, but no.

  6. WCI,

    Presumably you use either the customized age-based or customized static options. Would you share what your allocations are? I’m setting up an account and I’m trying to decide how I’m going to set up my customized option.

  7. I know this is an old post, but when it comes to 529 plans, it seems to make sense to contribute up to the limit which your state provides a tax deduction. Then if you wish to contribute more, should I put the money into Utah’s plan to save on expenses?


  8. Hi james,

    I was tipped onto your website by a friend and have become an addict. I am currently trying to convert my IRAs to 401k’s so I can start the backdoor ira.

    MY question to you is regarding 529. I live in NY State. Can I still do the Utah plan even if there is little to no chance my kids will go to school there? Is that the best option for me? Any help is appreciated. Thanks

  9. I have a 529 through Upromise (Utah) for my children that I funded for the first 5 years of their lives. After my divorce, the court ordered that the funds go to them for college or personal use after age 26 if they don’t go to college.

    Can I open another 529 in Utah for them (I want to be able to control what occurs with money including giving to grandchildren depending on if they get scholarships or don’t go to college) or would it be better to just continue funding their current accounts?

    • You mean do you use the “advisor guided” plans where you pay more or the “direct plans” where you pay less? I guess I’d probably go with the direct plan and then if you need advice seek that out separately.

  10. Random question about 529s. I would like to start thinking about contributing to a 529 but don’t have children yet. My understanding is that a 529 for someone in the family (for example child A) can be used for someone else as long as they are in the same family (child B) in the event that child A doesn’t go to an extensive school. If I understand it correctly, I can use it as one big pot of “family” money that can be allocated to whoever I want. Along those lines…

    1) Can I put money in my name or my wife’s name now (with the intention of never using it for us) and that would go towards my kids tuition in 20-25yrs? When they are subsequently born, I could then start contributing directly to their accounts?
    2) Even when my child is born, could I contribute to multiple 529s under various family members (me, wife, my parents, etc…) as well as my child, all with the intention of it going towards child A?

    • Yes and yes. Be sure to read the rules of the specific 529 you use. There are lots of loopholes there for someone willing to change beneficiaries frequently. Keep in mind one downside of using “one big pot” is that you only get one state tax deduction/credit (assuming you get one at all) rather than multiple ones. So the beneficial way to do it is open multiple 529s for different beneficiaries, get the tax break, then combine them by changing beneficiaries.

  11. Thank you so much for all your help and guidance. You are certainly much appreciated. I was wondering which of the UESP investment plans you would suggest for a 5 year old and a 8 months old. Aggressive vs. moderate, age based vs. static.

  12. Thanks for the 529 articles, your book and the website. I looked at the chart in your “best 529 plan” article and found your suggestion for using my state’s plan in Mississippi versus the Utah plan and I have a question about an option that I am not sure you considered. MS has higher exp ratios than Utah at 0.64 total minimum ER for the Mississippi plan. Note that you can do a rollover to another state’s plan every 12 months. Also note, that the disclosure for the MS plan indicates, “Outgoing rollovers that are free from federal income tax are also free from Mississippi income tax.” It seems to me that I could make monthly contributions in MS, claim my tax deduction for a 5% profit, then transfer everything in the account to the Utah plan EVERY 12 months. So, I pay the Mississippi high fees on only one year’s contributions/earnings every year rather than paying those fees on the accumulated account value over say 17 years. I actually do better than paying Mississippi’s higher fees on only one years’contributions/earnings because my contributions are made monthly rather than the entire amount being there for an entire year. Am I missing something?

  13. Hey All,
    Live in NJ and just had a baby girl and looking to open an age based 529. Have most investments with Fidelity and they now offer a fairly low cost 529 option in either Arizone, Mass, New Hampshire, DE and all have an index based age fund with ER around .24-.29. Or I can go with Ny or UTAH, but may be less convenient than having all in one place at Fidelity. Not sure if worth it. What do you guys think. FYI planning to auto-invest monthly. Thanks in advance

  14. My 529s are 100% stock, 50% TISM, 25% DFA SV, and 25% VG SV –

    I am new to this, but believe in 100% stock portfolio!

    Appreciate you clarifying your underlying funds –
    1. I get TISM is “VG Institutional Total Stock Market Index Fund”
    2. What’s DFA SV?
    3. What’s VG SV?

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