Morningstar’s annual 529 plan study looks at plan costs, asset allocation, diversification, the quality of the underlying investments, flexibility of investment options, clear plan disclosures, and investment managers’ records of treating shareholders with respect, based on Morningstar’s proprietary Stewardship Grades for funds.
According to a press release from the consulting firm, Morningstar’s new list of the best 529 plans is similar to last year’s list, with the exception of the Maryland College Investment Plan run by T. Rowe Price, which edged out the Alaska T. Rowe Price College Savings Plan.
The Maryland plan did well by eliminating its enrollment fee and lowering its management fee, among other factors. The Alabama Higher Education 529 Fund and Nebraska’s AIM College Savings Plan kept its place on Morningstar’s worst plan list.
According to Morningstar, there have been significant improvements on the tax front that have enhanced the appeal of 529 plans relative to other college-savings vehicles. The consultant also commended management upgrades and fee reductions at a number of plans.
According to the list, the five best 529 plans and their administrators were:
- Colorado Scholars Choice, administered by Legg Mason
- Maryland College Investment Plan, administered by T. Rowe Price
- Nebraska College Savings, administered by Union Bank & Trust
- Utah Educational Savings, administered by Utah(Vanguard)
- Virginia CollegeAmerica, administered by Virginia (American Funds)
The worst 529 plans as ranked by Morningstar were:
- Alabama Higher Education 529, administered by Van Kampen
- Alaska John Hancock Freedom 529, administered by John Hancock
- Missouri MOST 529 Advisor, administered by Upromise
- Nebraska AIM College Saving, administered by AIM
- West Virginia Cornerstone SMART529, administered by The Hartford
- West Virginia Leaders SMART529, administered by The Hartford
For the complete report, go here .
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